Unbeatable Nexus

A group of retailers are waiting with their purchases just inside the sliding glass doors at the entrance to United Wholesale’s 170,000 square foot Queenslie depot to the east of Glasgow. This is part of their weekly routine and the atmosphere is business-like and flat.

What happens next is part of the magic that Asim Sarwar, the 31 year old managing director of United, has brought to the family business. Edinburgh retailer Nadeen Akbar sees Sarwar and his face lights up into a smile. The two men greet each other and chat quickly as friends. Amid the enormous scale of this warehouse entry Sarwar has generated a sense of community and intimacy. And this type of relationship repeated hundreds of times is driving business success.

For the past 12 years United Wholesale, a Today’s Group member, has been growing at 15.5% a year, from sales of £38m to £212m. It generates these sales from two depots in Glasgow, which is one of the most intensive battlegrounds for convenience cash and carries in the UK.

Sarwar’s father Mohammad was Britain’s first ever Muslim MP and his younger brother Anas is now MP for Glasgow central. With his family Sarwar plays a leading role in the lives of the south Asian community and it is this community’s investment in retail that in turn helps United to grow.

In person, Sarwar is charismatic, friendly and outgoing. But he is also fiercely competitive and focused. He puts down his success to three things: hard work, determination and vision.

While economists have argued that consolidation in the wholesale channel is inevitable, the United story makes a strong case for the survival of independent regional players. The benefits independents have are several, says Sarwar.

[pull_quote_right]We are like a speedboat. We can change direction in an instant whereas [Booker and Bestway] are like the Titanic – they have to go up to head office[/pull_quote_right]

“First, we are the owners of our business and we are approachable to our entire customer base. Second, we know our retailers on a professional and personal level. Third: we know and understand our market better than anybody else.

“Fourth: we are like a speedboat. We can change direction in an instant whereas [Booker and Bestway] are like the Titanic, they have to go up to head office and get decisions before they can move about. Fifth: the majority of our staff are Asian and are part of the community. Booker and Bestway cannot give service like we can. They can’t do it. If a female customer comes in or an elderly gentleman we help them take the stuff out and we help them load their vans in the car park.”

The other reason is its symbol group: DayToday, a Today’s Group fascia. In the past 18 months United has converted more than 100 shops from other symbols: 35 from Premier, six from BestOne,20 from KeyStore, and30 from Lifestyle Express. Its symbol strategy underpins its sales success.

“We were lucky that we recognised six years ago that symbol would be the way forward,” says Sarwar. “In that time our number one objective has been to develop and grow our symbol group operation.”

United owns the DayToday brand in Scotland and has 275 stores operating under three fascia schemes in the belt stretching from Glasgow to Edinburgh. The SWA has recognised DayToday ahead of Nisa and Spar as the best symbol, notes Sarwar. Its tie-up with Nisa means that all of its stores can take advantage of a chilled and frozen supply chain.

DayToday Express is free, DayToday costs retailers around £500 a year and its black fascia is for the elite. Mohamad Aslam’s 2,500 square foot store in a converted pub in Wallyford is the best store in the estate.

United invests heavily when it sets retailers up with their fascias. Its retail development team includes merchandisers and store planners who work for five or six days on setting up the new store. Standards are then monitored by a retailer development manager who visits regularly.

Sarwar is optimistic but also demands discipline.

“All retailers want to grow their business and want to make money,” says Sarwar. “The reason why our symbol group has been successful compared to other cash and carry retail clubs is because we demand discipline. What is the point of investing £5,000 to £6,000 a store if the guy is not going to run the deals? We just would not tolerate that.”

United has another offering called U-Save where stores that don’t want to maintain the discipline can go, with 12 moved across in the past six months.

[pull_quote_right]What is the point of investing £5,000 to £6,000 a store if they’re not going to run the deals? We just would not tolerate that[/pull_quote_right]

However, Sarwar is clear that wholesale needs to serve all retailers. “There is still a strong independent retailer in business out there. A large number who want to keep their own identity so I think we have to work with them, to educate them, to give them advice and help with drop shipments…such as our, one pound ranges. We do try and work for both parties. The difference is we have more resource available and can work more closely with retailers that become symbols.”

If United had not gone down the symbol route its business would have been totally different because “we would still only be working with the local independents. We would have a serious disadvantage without symbol.”

DayToday gives Sarwar the opportunity to promote his company in new areas. It attracts retailers who want to expand. For example, retailers with strong family bases and with a brother or nephew in the business tend to grow quicker than a single man business. “The retailers that can build a good team around them are the ones that can end up becoming multi-store operators.”

Sarwar adds: “The better retailers are all moving towards symbols. Of your top 30% of stores, 95% of them are with symbol. If you want to work with the bigger stores you have to be with symbol.”

Without symbol whatever business walks through your front door is your business. With symbol the wholesaler gets scale and predictability. You will know a quarter in advance how many shops will stock a promotion and you will have a 90% confidence of compliance.

This drives benefits for shoppers, retailers, wholesalers and suppliers. The average sales uplift for DayToday is between 15%-20% says Sarwar. Suppliers are prepared to pay more because they know their deals will reach the shopper. As part of the Today’s group, United already has good prices and it negotiates directly to enhance the offer.

But cash and carry operations also need to offer a wide range, which dilutes profitability. While Sarwar claims it is very disciplined, he also says it has to serve its customers. “The consumer dictates: we have to follow. That is the way the market will move.”

New product development is one of the most exciting things about the industry, he says. “We have to support NPD especially if suppliers are investing in a brand. You have to be sensible. Some NPD you know won’t work. Then there is NPD that is guaranteed to work, for example if Cadbury or Mars come out with a special edition it is going to fly.”

At present United is a retail operation. It has just started on-trade and may look at food service in future and perhaps Asian catering. It opens a new depot at Newbridge later this year and Sarwar sees room for growth on the east coast.

He is confident in part because United keeps winning business from its competitors and in part because his customer base is investing in retailing. “We are quite lucky because the Asian community is very large in the UK and the majority of the retailers in the area we are operating are Asian,” says Sarwar.

“The younger generation are coming through and taking over the stores. The good thing is that the younger generation don’t like going to cash and carry and doing their back in. They would rather order in and spend that time in the shop. They are more likely to use epos and technology and move forward with the times.”

These retailers buy into the ideas that United has for their future and this adds to its strength. “We have the highest penetration of stores in an area in the whole of the UK. Premier has 230 stores from the bottom of Scotland all the way to Wick. We have 275 stores in Scotland’s central belt. No other symbol group operator has that penetration. Even Nisa won’t have 250 stores in that sort of area. Even Blakemore Spar won’t have it.”

Sarwar believes that he can lead further growth even as his business reaches a bigger scale. “Why not? I don’t think there is a limit. In last six or seven months I have gone out of my way to know the community in Edinburgh. Go to every wedding, to every birthday party, to every charity event. Every Saturday I am there visiting eight or nine stores. I probably know 85% of the retailers in Kirkcaldy now.”

His personal drive is supported by building a good team. “Our strength has always been community. That is our strength. Because we are not seen just as a wholesaler. I think because my father was involved in politics too that helped because if someone had an issue they would come to United and we would solve the problem.

“You never forget what made you successful and what made us successful is that local touch. Knowing our customers and working with them. Being available to them. Supporting them with whatever they need and understanding what they want. And I think the reason that we are where we are today is because we have understood that. I don’t think you ever forget the winning ingredient that made you a success.”