The Christmas party season is a crucial and potentially lucrative time for wholesalers, but there are serious challenges to overcome in order to make it a success.
Get your Christmas plans organised early and your strategy right and you will make big gains and win new customers. Get it wrong and you could crash and burn. Here are four key areas on which to focus.
Compete on price… How to manage the rush and take advantage
Everyone knows it – suppliers, wholesalers and retailers – price is the crucial factor at this time of year and with supermarkets using key lines as loss leaders, getting your strategy right is vital.
In the words of one wholesaler, the last three to five days before Christmas can be “horrible”. While suppliers typically begin promoting in November, many wholesalers hold their nerve until the last couple of weeks before Christmas, when prices come tumbling down, one depot after another. Canny retailers wait until the last moment to get the best deals, and this creates a headache for wholesalers, with resources, stock, customer service and cash flow.
Sony Bihal, managing director at Time Cash & Carry, says: “To start with, wholesalers will sell a case of vodka for, say £56.99, then ‘wholesaler X’ will drop the price and people will wait for that because they know he’ll do it. Then ‘wholesaler Y’ will drop it down further and ‘wholesaler Z’ will come in at a lower price.
“At the same time supermarkets are going crazy on prices and you really can’t blame retailers for buying up the stock in supermarkets. Most of the deals in supermarkets are usually empty because retailers have taken them.”
To counter the effect of the Christmas rush, Time Cash & Carry carefully spreads its Christmas offer throughout November as well as December, offering deals and terms that give its customers the confidence to start buying early.
However, it is a balancing act and Tom Gittins, business development manager at buying group Confex, says you have to be careful about promoting too early.
“Time your promotions right,” he says. “If your products are on promotion too long, it becomes an EDLP (every day low price) – and it can devalue the brand.”
It’s important for wholesalers to talk to their customers about prices in October, says Chris Shead, off-trade channel director at spirits supplier Pernod Ricard.
He says: “Wholesalers have retail clubs and there is an opportunity for them to make more of digital communications. Digital is a really quick way for wholesalers to talk to their customer base about what you are doing.”
Today’s Group trading director John Baines says there is an opportunity for wholesalers to focus on the period between Christmas and New Year when the multiples have exhausted stocks.
He says: “The biggest challenge for wholesalers and their retailers in the run up to Christmas is the product pricing that the multiples are able to sell seasonal products at.
“They use seasonal events as loss-leaders to drive footfall through their stores. This is particularly evident in the licensed and confectionery categories.”
Availability: You risk losing customers if you cannot guarantee to have what they want
A major complaint of wholesalers’ customers at Christmas is stock availability. Michelin-starred chef Sarah Blewett is planning for her first Christmas at the Gallery Café, in Truro, Cornwall. She uses Chaffins Foodservice for dry goods and Newquay Fruit Sales for fruit and veg, because they always get things in if she needs them.
“When I worked in restaurants, our wholesalers were a nightmare,” she says. “They wouldn’t ask us what we were going to need for our Christmas menu and we would have to ring around to try to find the things we needed.
“What would be really useful is if wholesalers contacted the people they supply in October to find out what they need.”
Foodservice wholesaler Bidvest 3663 has responded to customer feedback by sending out its Christmas range earlier than ever before (see case study above).
Campaign manager Gail Bridgeman says: “It’s what customers were asking for – we know they want to plan ahead for Christmas. With schools and hospitals, they need to plan for budget reasons. For pubs, people actually have their Christmas party celebrations from November.”
Londis retailer Jeet Bansi says his wholesaler, Musgrave, makes his life easier by offering a pre-sales brochure. “It means we can order ahead of time so that we can ensure stock availability and keep our customers happy,” he says.
“It also helps us plan our orders. For example, we may not want Christmas puddings and goose fat at the start of December, but we can order in advance so we will have it closer to Christmas.”
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