Almost two years ago I wrote here about our ‘cautious optimism’ regarding the Booker acquisition of Budgens. That optimism has been proven to be correct with a significantly enhanced model achieved in a relatively short time, and it’s a good job, too. The scale of challenge and change that we face has never been greater.
So even before the shock announcement about Tesco and Booker many of us had concluded that further consolidation in the symbol market was a necessity.
In my opinion the future of successful convenience retailing will be explicitly linked to our ability to offer highly-credible fresh food ranges, both in the food-for-now and food-for-later shopper missions.
We must also have the ability to engage with consumers using different technologies, with the caveat that this all has to be achieved within a scale that makes it profitable for the supplier, wholesaler and retailer – and acceptable to the consumer.
As independent retailers, we must face the unpalatable truth that we are behind the multiples in these key areas. Certainly, the Tesco-Booker merger presents opportunities around scale and many retailers have speculated on how big a reduction we can expect to see in wholesale prices if the deal goes ahead. I would argue that it’s the unique benefits that only a multiple retailer can provide around fresh ranging and technology that will keep our stores trading successfully.
Things are not getting any easier in our world so I look upon this merger as an opportunity to ensure my business is fit for the future and find myself back at ‘cautious optimism’ for a second time.