Buying groups: Strength in numbers
After a challenging few years, now is the time that wholesalers are making decisions about their future, so we caught up with the UK’s leading buying groups to see how they differ and what they have to offer
When it comes to business, bigger is better, say the UK’s leading buying groups.
“In a nutshell, buying group members benefit from economies of scale,” says Caterforce MD Gary Mullineux. “Cumulative buying power means independent regional wholesalers can compete with larger national wholesalers to deliver the best products and prices.”
Unitas Wholesale MD John Kinney agrees: “The core function of all buying groups is to harness the scale and reach of their membership to negotiate preferential trading terms with suppliers while also providing suppliers with an effective and efficient route to market. With suppliers constantly looking for more efficiencies, often resulting in reducing the number of direct accounts, many independent wholesalers would not be able to acquire direct stock unless they are a member of a buying group.”
This is a sentiment agreed across the board when we spoke with several UK buying groups: Caterforce, Confex, Fairway Foodservice, NBC and Unitas Wholesale.
“For an independent wholesaler, the biggest benefit of being part of a buying group is that of scale, opening the door to improved trading terms and an improved network of suppliers and product accessibility,” says Coral Rose, MD, Fairway Foodservice.
“Buying groups also offer wholesalers a single point of contact for dealing with suppliers,” says Jess Douglas, Director, Confex. “Where the supply chain has well-established routes to market, it can be very hard for a wholesaler outside of a buying group to develop individual business with suppliers. As part of a buying group, wholesalers can leverage improved terms, pricing and promotions through the collective group turnover while accessing all the big brands.
“We offer wholesalers of any size the opportunity to develop their business across all product categories, with access to thousands of promotions spanning more than 200 supplier partners.”
Buying groups can also provide access to essential services.
“There are services that only scale can provide and that smaller members might not be able to provide or access themselves due to cost,” says David Lunt, MD, NBC.
“These could be marketing or sales tools, or agreements for goods not for resale such as telecoms and utilities. Nothing is for free and there are a variety of membership options and costs that fund these business models.”
POINT OF DIFFERENCE
With such fierce competition, it can be hard to identify how buying groups differ and what they offer to their memberships. We asked the buying groups what they felt made their offer stand out.
“We are a friendly professional team who are foodservice-focused and specialists in understanding and adding value to our members,” says Coral. “Being a not-for-profit organisation means that Fairway invests its money back into services to support growth.
For example, we provide a full individually tailored marketing plan for our members including corporate videos, websites, social media and e-marketing campaigns, as well as bespoke brochures.
“We provide strong commercial support and work collaboratively with our supplier partners for the development of an excellent own-brand range. Our online portal makes it easy for members to access up-to-date product and supplier information. We acknowledge that every company starts small and we are proud to have been instrumental in helping our members grow. As a group, we share experience and encourage member interaction and dialogue as there is always something to learn to help everyone boost their growth, regardless of size.”
For Caterforce, the offer focuses on supporting each member’s USP. “Our members are regional champions, proud of their heritage and fiercely independent,” says Gary. “We recognise this and help them nurture their individual identities. We select our members carefully to ensure there is minimal competition or crossover and involve the members in all decision making.
From board level through to trading teams, marketing, sales, finance and IT, there is an openness and willingness to work together and support each other.
“From our customer surveys we know the importance of imagery to increase sales, so we offer all members 10 days per year in our studio with expert food photographers, stylists and development chefs. Our creative team act as an extension of our members’ marketing teams, supporting them with everything from flyers to trade show stands and monthly magazine production.
“Caterforce members are exclusive stockists of our four award-winning own brands – Chefs’ Selections, Eden Grove, Roast 440 and ProClean. Our dedicated own-brand buying and marketing team ensure we deliver the best products at the best prices, and sales are growing year-on-year.”
David says: “Since NBC first started, it has been clear that what we do for members is a little bit different – we provide access. Access to major brands that are consolidating their supply chains in this sector. Access to volume discounts that buying scale and our central distribution facility, NDN, provides. Access to great net pricing that allows smaller independent businesses to compete with larger competitors. Access to all of the terms agreed with supplier partners – 100% in full and on time. Access to free-of-charge business tools that are relevant and make a difference, such as our web-to-print brochure service. Access to consumers at point of purchase or consumption – we must always remember that we are just one element of the supply chain. We make sure that brands are available and we help activate brand plans on behalf of our supplier partners. And all of this is accessible without any membership fees or levies. Membership comes through shareholding, which effectively means that membership is actually an investment.”
John says: “As the UK’s biggest independent buying group, Unitas has some of the largest and most successful independent wholesalers among its membership. We trade across retail, foodservice, on-trade and specialist sectors, which means we are well-placed to negotiate preferential trading terms for our members. However, the Unitas service offer goes well beyond this. We support our members with multi-channel promotional programmes, category advice and marketing support, and these services are also available at B2B and B2C level so members can support customers to build strong sustainable relationships. We also support members’ financial administration
through central invoicing and, by centralising operational functions such as brochure design and print, and securing preferential rates for services, we can help to reduce their operating costs.”
Jess says: “We work with more than 200 suppliers across all categories, do not operate a joining or membership fee and head office costs are funded by a very competitive levy on rebates. We are governed by a member-led board with all profits shared according to member participation. Become a Confex member and you will be paid a dividend each year.
“Confex has grown by 72% in the last 12 months, attracting 15 new members and helping to grow the group turnover to more than £3bn. We are currently growing faster than our competitors, which has been driven by our members embracing technology and diversification. The success of our award-winning own brand, CORE, has created a point of difference for members too.”
All of the buying groups have ambitious plans for 2023. From IT projects to own brand, it’s clear that no one is content to stand still.
“We have a big focus on our own brand, working collaboratively with our suppliers and development chef,” offers Coral. “We commissioned research at the start of 2023 that told us 43% of chefs get their inspiration from social media versus 15% from magazines, so we will be further enhancing the social media and digital marketing programmes that we manage for our members. We will also be launching an exciting new customer engagement activity that we will share with our supplier partners.”
“We are making small, steady, incremental steps in how we run the group,” says David. “We have a new leadership team to act as guardians of the group – we are always close to what our members are actually experiencing. We have grown the head office team to support our relationship with members. We’re now rolling out our web-to-print brochure service across the membership and developing NDN as a route-to-market for supplier partners who want to explore different routes to market.”
Caterforce is focused on technology throughout 2023 to support its membership and suppliers, launching a new website and members intranet later in the year, while Unitas is aware that its members are facing increased business costs.
“We are investing to provide additional support to help members reduce their cost to do business while ensuring we provide the strongest trading terms and promotions to allow members to compete effectively,” says John.
For Confex, the focus is on data insight, retail and Food To Go clubs, plus its new online sales platform, Confex Direct.
“We are always implementing new projects to ensure our members can compete with larger national wholesalers and access new and innovative income streams,” says Jess.
“Confex events are always enjoyable, such as our trade show and awards ceremony in March, foodservice fair in September and our conference in Lanzarote in October. Events give members the opportunity to network with suppliers and other members and take advantage of member-only offers.”
THE RIGHT CHOICE
How would our buying group bosses advise independent wholesalers to choose the right group for them?
“Each buying group has variations in its make-up and the supplier partners they work with,” explains Jess. “Whether a buying group is predominantly focused on cash and carry, delivered, retail, foodservice, impulse or frozen, wholesalers need to look at their requirements before making a choice.”
“Look at the services the group offers and consider how these could contribute to your business growth” suggests Coral. “Meet up with a couple of existing members to find out how they have benefited commercially from membership. Finally, foodservice is a people business, you want to work with likeminded people who you feel value your membership.”
“I would have a checklist for consideration,” offers David. “What are the costs associated with membership? What services can we access? Would we be paying for services that we won’t use? Do they have agreements in place with all major suppliers? Do we get all of the terms agreed with suppliers? Do they have an independent source of central purchasing? Would we fit within the culture of the organisation?”
John advises: “Look for the group that offers resources you can leverage to boost your business. Look for a group that puts the member at the heart of every decision it makes and wants to be your business partner for the long term.
“The most significant benefit of joining Caterforce is the collaborative approach to sharing best practices on everything from ecommerce platforms to ERP systems,” finishes Gary. “This really is invaluable for independent wholesalers.”buying group Caterforce Confex Fairway Foodservice NBC Unitas Wholesale