Big interview: Integration Consulting
Director of Marketing and Sales Luis Correa reveals the insights and knowledge the strategy and management consultancy has to increase channel effectiveness
Who is Integration Consulting?
We’re a strategy and management consultancy that not only designs solutions but implements our recommendations. We’ve served more than 350 leading consumer goods brands, retailers, wholesalers and distributors in 50-plus countries. We have in-depth knowledge of sales and distribution challenges across the value chain, ranging from how to develop a successful go-to-market strategy to optimising the efficiency of commercial teams.
What can you offer to the wholesale sector?
We have experience in the difficult, delicate balance wholesalers must preserve as middle parties of the value chain. Our focus is to help wholesalers establish and maintain effective business relationships across the channel. We do this by acting on top-line performance levers such as pricing, revenue management, geographic gap coverage and portfolio analysis to capture significant EBITDA, supported by cost-effective, growth-driven sales processes and supply chains.
We also believe suppliers play a key role in helping wholesalers operate effectively inside tight financial constraints. Products must be simple to sell, with clear margins and represent mutually advantageous objectives, such as agreement between supplier and wholesaler about which customer segments to target, in which geographies, and with what products.
You’ve worked in this sector in other nations, what are your biggest achievements?
We work in the wholesale sector globally. We feel we’re most successful when the work we develop with a client makes a lasting impact on their goals, which for a wholesaler might be geographical expansion or greater profitability. The biggest successes come from managing EBITDA levels inside margins of 3-5%. Our initial focus is increasing revenue through correct pricing per region and channel, efficient discounting, geographical coverage based on consumption distribution, and increasing the rate of sales and coverage by channel and product line. Costs should be optimised too but with an eye towards protecting revenue. Commercially, this translates to sales routes, sales routines, well-organised KPIs and visibility into trade ROI and process controls.
How does the UK market differ?
The UK market is more mature and structured than most. In Western Europe, about 80% of shop-based grocery retail is modern trade, compared to more than 90% in the UK. The difference between UK food-chain sales is an even more striking example, representing substantial volume over Western Europe. This places pressure on the entire market – you have to be organised and sophisticated to compete.
On the other hand, it also creates opportunities for UK wholesalers to become true specialists and provide end-to-end service by sector. On-trade beer is a good example of a sector in which a few dominant suppliers, wholesalers and retailers collectively shape the market. Looking elsewhere in Europe and beyond, significantly more variation exists in how players go to market, often driven by suppliers’ strategy.
What do you see as the key challenges in the sector currently?
Our clients are concerned with the same trends that are causing turbulence in the sector across the board: market disruption due to e-commerce; direct-to-consumer players and challenger brands; and policy and legislation changes, particularly in health and sustainability.
It’s uncertain how wholesalers will transition from the business models of today to those of tomorrow and what role suppliers and retailers will play. However, we believe the underlying challenge for wholesalers is the ability to look at what’s ahead and translate that knowledge into practical steps at the organisational level.
Identifying ways to exceed existing service levels and add value to the chain are critical. We urge wholesalers to ask questions such as, ‘what pricing and discounts do I need to implement across channels?’, ‘how can I continue to balance categories and regions?’, ‘what is my optimal cost level given new demands?’ and ‘what is the cost to serve for each new client?’.
It can be difficult to maintain business as usual while answering these questions, but putting too much energy into forecasting can be as much of a trap as not approaching it pragmatically.
Supply chain has been brought into sharp focus due to Brexit. Is there anything businesses can do to reduce risk in this area?
We think virtually everyone should be preparing plans B and C with regard to Brexit, often in the context of a no-deal scenario. We also believe that preparations shouldn’t take place in isolation. Brexit is likely to disrupt the whole supply chain, from manufacturer to shelf, so collaborating with the other players that will be impacted is key. For example, the cost pressure on foodservice operators due to the representation of EU workers in the sector will likely impact margins and cash flow across the value chain. Integrating approaches is the most effective means of preparation.
B2B marketing in the convenience sector is notoriously difficult. What is your top advice to tackle this?
The convenience sector is tricky because it includes store owners as well as wholesalers and buying groups, which expands the number of players involved by the thousands. B2B marketing in this context must consider the reality of the store owners on the ground. They are busy, small entrepreneurs, who often rely on less than a handful of people to oversee all aspects of their businesses.
These stores also play special, unique roles within their communities. Whatever strategies are selected must be simple to apply and manage on a daily basis, and cater to the interests of neighbourhood customers.
Get in touch with Director of Marketing and Sales Luis Correa at lcorrea@integrationconsulting.com or visit integrationconsulting.com for more information and to access a suite of insights on B2B go-to-market design and strategy.
convenience Integration Consulting management marketing retail strategy suppliers supply chain Wholesalers
