The event was billed as “Your Business, Your Future!” But at Pro-Retail 2017 in Telford last month Martyn Ward, Managing Director of Palmer & Harvey, wasn’t taking any questions about P&H’s business now or in future in the wide ranging press briefing.
Despite its recent problems Palmer & Harvey still looks outward and remains true to its roots as a people business dedicated to serving independent retailers, caterers and their communities. Some 250,000 people go missing every year, including 160,000 children, though thankfully they are usually found in 48-72 hours. In a warm-hearted new initiative, which sends a supportive “we’ll carry on!” message to the families and friends affected, P&H have joined up with Missing People, a new charity partner and have been reprinting their van panels to feature missing individuals.
“It goes back to P&H’s basic principles,” Martyn Ward said. “Our vehicles cover every postcode every day. We are delivering hope and are immensely proud of it.”
Mr Ward was particularly excited about the product launches at the show, led by Philip Morris International (PMI)’s IQOS, which he described as “massive.” Tobacco is historically at the heart of Palmer & Harvey’s business. Monday 22nd May was the day independent retailers had to take stock off the shelves, which didn’t comply with the EUTPD2, the new Tobacco Directive. It was a key date for P&H: “Our support has seen a very positive response. It’s been a testing time for retailers, but they have weathered the storm.”
Martyn Ward conceded P&H had no handle on the volume of illicit tobacco entering the UK. Asked if EUTPD2 would change anything, he eplied: “The big question is – is this organised crime? Is it money laundering? Tobacco is a very price-sensitive market and with price-marked packs not available, consumers have been switching to disciplined retailers. “Tobacco is a high value item, generating footfall and cash margin.
People can’t imagine convenience stores without cigarettes and alcohol, but Euro Garages do neither and yet they are doing well. We might have to lobby for legislation about how much product consumers can bring back. There might also need to be a retailers’ registration scheme.”
Palmer & Harvey are competitive on tobacco for independent retailers. Martyn wouldn’t be drawn on whether the major supermarkets are selling it below recommended retail price and what individual accounts are doing: “There is a problem in cash & carries of non-compliant tobacco products disappearing then reappearing. Some manufacturers managed to supply compliant problems, others have struggled.”
In his capacity as head of the UK’s leading tobacco and confectionery wholesaler, Martyn Ward conceded that Palmer & Harvey have a struggle educating the retailers they serve to buy the right products: “If we stock 12,000 lines, are they buying the right 3-4,000? If the range is correct, retailers will get the benefits, but a lot of currently stocked convenience products just shouldn’t be there.”
It’s not exactly a new thought. John Drake at P&G, among others, has made the same argument in recent months. Martyn Ward quoted figures from Retail Economics, showing retail price inflation rising 2.6% at present and predicting it hitting 3.3% by December, but the poorest consumers’ disposable income was down 18%.
Addressing the need for retailers to focus their ranges better, Martyn Ward said many consumers were trading up but others were suffering a drop in disposable income:
“The middle is being squeezed, and every retailer needs to understand their local market. A lot of retailers don’t have the right range – many have probably purchased items because one consumer asked for it. The average c-store should only have 2,500 sku’s. To survive, you need the right brands on the shelves and look at the level of spend. Food to go is a fantastic opportunity – people go for a healthy breakfast in the morning and return to buy wine at night.”
Category Education brochures are the newest activity in Palmer & Harvey’s commitment to retailer support. Meanwhile, Drinks Direct is the wholesaler’s latest direct business offering to be tested, with a nationwide 10-van trial currently under way.
Footfall generation in independent convenience stores has always been important but now in Martyn Ward’s words this activity needs to be ‘disruptive’ – a term marketers are so fond of – to generate impulse purchases. P&H have had a hard time of it getting retailers involved with social media, hence the social media hub on site at Pro Retail to encourage them.
A more recent key part of their business model, Palmer & Harvey’s transactional website has gone from strength to strength. It is being supported by the new Barcode scanner app launched at Pro Retail, free to download and available for IOS, Windows and Android.
Despite Martyn Ward’s reluctance to talk about the business’s problems he did touch on the closure of BuyCo, Costcutter and Palmer and Harvey’s joint negotiation company which was part of the Costcutter deal: “Market changes meant it was unworkable, so we have brought the buying back to P&H’s head office. We want to drive out complexity and offer retailers the best in service.”
He was happy discussing the major contracts put in place just before the show, the three year Tesco distribution deal, the Shell five year supply deal and the tie-up with Wilko, supplying impulse ranges to their nationwide store networks:
“To underpin this and achieve the necessary operational efficiencies we must have a strategy of continuous improvement and continue to review every part of our business.”
As part of this strategy, in the second phase of P&H’s Electronic Proof of Delivery programme (EPOD), 850 bits of kit are now out there confirming delivery times and helping facilitate a more effective service to customers.