Unitas Wholesale members will share more than £2m in incremental revenue in return for their participation in the group’s central promotions, publications and events.
The More for More incentive, revealed at the Unitas Wholesale connect25 trade show in Liverpool, will help drive engagement, execution and compliance in supplier partnership activities.
It will reward members who can demonstrate a higher level of engagement in schemes including the URP promotions programme, the retailer support portal Plan for Profit, customer-facing promotional materials and the buying group’s flagship trade show and conference.
John Kinney, Managing Director of Unitas Wholesale, tells Wholesale Manager more about the scheme and how the group will overcome the challenge of rising costs.
How many members and suppliers attended the Unitas Trade Show?
We don’t have exact figures yet, but there were more members than ever and more suppliers than ever, including 38 new ones.
What is the goal of the show?
There isn’t one goal. It depends on the supplier. Some suppliers are here because they want to do a deal, and they want to drive volume. Some suppliers are here because they want to talk about NPD. Some suppliers are here because they want to meet new members and build distribution. So the goal is different for different people. We do a survey and ask the suppliers what is your objective and did you meet it? They have different objectives. Someone will say, I have opened four new accounts, that’s what I wanted. Another person will say, I sold 10,000 cases, that’s what I wanted. Someone will say I met three guys I never met before and it’s brilliant. That’s what the trade show is designed for – whatever you are trying to achieve, its fine. Ultimately, we would love it to be about volume. Last year £23.5m of business was done. That was a record and we are aiming to beat that this year. At a time when the market is flat, you will probably find the priorities start moving towards deals. When the market is buoyant, people say I don’t need a deal, I don’t need volume, I want to open new accounts and new distribution points. It depends where you are in the supply chain and what your current need is at this point of the year. For some, it’s the end of the year and they want to get some volume in. For some, it’s the start of the year and they want to talk about their brand plans.
How does the show benefit members and suppliers?
We bring together a lot of members who perhaps would not get called on by suppliers. Some members come to the show because they won’t normally see these suppliers. They may not be big enough to justify a rep calling on them from across the country. It’s a great way for them to see suppliers. The reverse is true for suppliers. Some of our members are on the Isle of Man, they are in Devon or north Scotland. So the trade show is a great way to build those relationships.
There were also exclusive deals – the deals were available only during the trade show. For some of them, that’s the benefit of coming to the show, they get a deal they wouldn’t otherwise get. I think more importantly, they get to meet the brands they don’t get to meet outside the trade show. We know a lot of suppliers have taken feet off the street over the years so this is a very cost-effective way of meeting wholesalers. Some suppliers have actually put more feet on the street, realising they need that network of communication because thus channel is very different to the multiples. You can see by looking at the stands – they are designed to engage, create fun and have space to sit and talk. That’s important and the social evening is also designed to help networking. It is different for different people. It’s a cost-effective way of meeting wholesalers and suppliers and doing a deal under one roof.
Unitas delivered an increase of 17% in revenue for its 139 members during 2024. To what do you attribute this performance?
We have given very competitive trading terms. We created growth in a market where there wasn’t that level of growth. That 17% is not driven by cost increases and inflation. It’s because we did things, we got some exclusive deals, we got some incremental trading terms that generated more value in the business they did with us than they had done previously. It’s more engagement which drives more revenue.
We also delivered a 35% revenue increase over five years. The market hasn’t grown 35% in five years, inflation hasn’t grown 35% in the last five years.
Tell us about the More for More incentive.
Our commercial model has changed. Unitas makes a modest amount of profit. If you look at our business performance over the last couple of years, as a bottom line we have reduced our profit. That’s intentional. It doesn’t mean we are a less robust group, if anything we are stronger than we have ever been. But we return more money to our members before it gets to profit. We have accepted we are not here to build a balance sheet, we are not here to build the share price of Unitas. We are here to make a modest amount of profit. Our role is to return more money. Our business model and vison is to be a fitter, fairer and faster organisation, increasing members’ benefits year on year but also providing a return on investment for suppliers. That’s our model. So don’t join Unitas if you want to grow your share price. We are not here to build a share price.
Our profit has reduced, and we have released more money to our members. We have structured that in a way that we release it through schemes that we run. There are things that we do for our suppliers that are outside the trading terms – our Plan for Profit scheme, our URP promotional programme, our Bar and Kitchen magazines. If they improve that compliance and execution, there is a share of £2m, as well as the normal money they get. We’ve increased it by £2m. If you engage more with the centre and raise your level of compliance, you will share more of this money. The important part about that is we’re rewarding those that support the scheme most. If you engage, you get rewarded. If you don’t engage, you won’t get rewarded. That comes under the fitter, fairer and faster banner. Fairer means who receives the revenue from the group. If you engage, you get the money. If you don’t engage, you don’t get the money.
Are rising costs going to be a challenge for Unitas in 2025 and how do you anticipate the group will overcome this challenge?
I think absolutely rising costs will be a challenge, not just National Insurance and the national living wage, but PPR, DRS, all these items are driving costs into the sector. From a retail perspective, with the majority of retailers using price marked packs, we cannot absorb that because it just reduces our margin. The retailer can’t put a high price point on it, so we have to see if suppliers are passing on the cost or if they are absorbing it, and I can’t expect them to absorb it. So, we’re expecting to see price increases, but we have to also see that margin being protected, which will mean that price mark moving. We just want an open dialogue. If you’re now starting to think about where you’re going to position that new price mark, talk to us just before you do so we can understand and give some feedback on whether it should be a £1.25 or a £1.29, or a £2.99, or £2.75, let’s have those conversations. We can’t expect wholesalers and retailers to be absorbed in that cost.
Are you seeing the popularity of PMPSs dropping?
We’re seeing challenges from retailers saying these margins now don’t make it viable for me. I want a straight pack. We’re saying that we totally understand why you want to do that, but we don’t think that’s the way to solve this problem, because that will bring another problem. You will then start seeing inappropriate pricing in stores and the consumer not trusting that that’s a fair price for that product. Consumers love PMPs. And it’s all about trust. They were brought in for a reason, and we’ve managed to build that trust with consumers that you can get great value in convenience. If consumers don’t see that price mark, they say, well, how can I rely on that price, I had better go and check it. They’re not trusting you. We don’t want that. We want the supply chain to fix this within a price marked pack format, because it will drive other costs. Because if I can’t get that in a straight pack, well, I’ll buy the bigger one then. Then the consumer is going to pay a higher price. They then start thinking that’s expensive. I’m sure that was only £1.25 last year. It’s now £1.99 or £2.50. Yeah, but it’s a different size. They see a price increase. They then start thinking, well I’m not going to buy from there anymore. Not only do they not buy that product, but they don’t buy the price mark next to it that they came in for, they don’t buy the newspaper. They don’t buy the pack of cigarettes.
We do not want to move away from price marks. We want the supply chain to recognise this issue, protect the margin and make it work.
Are suppliers understanding that?
Some are, absolutely. Some have responded, some have come back and said, look, we hear it. We’re doing this, we’re doing the right thing. I know some that aren’t. We’re going to have those awkward conversations. No doubt there will be a take it or leave it attitude. There will be some brands that say, if you want my brand, regardless, you will buy it. But what you have seen is, in some cases, even the biggest brands in the world are seeing their market share being challenged because there are some good quality products. You only have to look at what the discounters, Aldi and Lidl have done with own brand, they have created a whole market where own brand is not being seen as cheap and nasty.
Do you have a target to growing the membership further?
It’s not key to us to grow the number of members, and the volume that sits within the group is a significant enough volume that we can work with. We believe there is still opportunity to give those existing members a better return. That’s our priority.
How is the Unitas own brand range performing?
It is performing very well. We are looking to double the range. There are 120 SKUs out there now, within the year, we think that’s going to be probably over 200 and near to 240. The market conditions lend itself to own brand so it will continue to grow.
Why do you think Unitas was named the suppliers’ favourite wholesaler in the 2024 Advantage Report?
We made a stance, a few years ago, saying, we want to start building collaborative relationships. That’s not just saying it, it’s actually doing it. We made sure that as a team, we are more out with suppliers in depots, not just doing work in the office. We want more face-to-face meetings. We made a positive stance to say, banging the table does not build relationships and give you a better price. It’s very short term. It’s not the way we want to work. We want strategic, collaborative relationships. And now, it’s coming through, we have seen that happening. Suppliers are saying, you’re working with us, you’re understanding our brands, and you’re helping us execute our brand plans, and that’s great. We are very proud of that, because we’ve changed the culture of our trading team, and we changed personnel because we wanted a different way of working. That doesn’t happen overnight, That takes time to change. Cheryl Hope, our Trading Director, has been instrumental in building that relationship with suppliers. We think we’re going in the right direction, that’s what has been recognised in the supply chain.
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