Appleby Westward is growing taller. It's the first thing I noticed when meeting the substantial frame of managing director John Pattison for the first time.
But it's also true in other ways. For one thing, 'Growing Taller' is the name of a new initiative to raise shelf heights in independent stores in the South West in order to accommodate wider ranges. And there's also an elevation in the metaphorical sense, as the recent creation of a company-owned stores division has given the wholesaler an entirely new view of the world.
The retail venture kicked off just before Christmas with the opening of three Eurospar supermarkets formerly operated by Somerfield, where Pattison spent 17 years, most recently as a regional director, before joining AW last April.
The new stores at Keynsham and Minehead in Somerset, and Liskeard in Cornwall are shortly to be joined by a fourth, a 3,000sq ft former Woolworths outlet in Bridport, Dorset, due to open later this month under the Spar banner. The company is also looking at other potential sites, although expansion will be considered rather than rapid, with a probable opening rate of two outlets a year over the next five to 10 years.
Pattison declines to give much away in terms of sales figures for the new stores, other than to say that they are performing "satisfactorily".
"We knew from the start we would have to work these hard," he explains. "You have to bear in mind that the Eurospar brand is unknown in the high street, and under Somerfield the stores will have had TV drives, leaflets and promotion-driven sales to support them. There are also got some very good Spar stores close by."
But running their own stores is delivering benefits beyond anything they take through the till, by boosting understanding of their retail customers. In Pattison's words: "We get to eat our own cake".
"We are now in a position to understand from a retailer's point of view whether we, as a wholesaler, are any good," he explains. "We see at first hand issues such as product availability, whether the IT is working well, whether deliveries are on time, whether our marketing is effective, whether we are fit for purpose. We had no real measure of it before."
Sharing information
Product availability statistics are now sent out weekly to the 300 or so independent stores in AW's catchment area a neat triangle with Southampton, Bristol and Land's End as its points as part of the group's new retail bulletin.
"We want retailers to tell us when we're going wrong, but also to understand the facts," he says. "We want to be in a place where we can find solutions, and we need to be transparent to achieve this.
"We have to react to problems quickly, because we have to solve them for our own stores. We are now asking ourselves: is this how our retailers suffer? It's making us much more reactive, and we are increasingly talking to retailers about retailing, which as a wholesaler was pretty alien to us."
Pattison started his working life filling shelves at the local Fine Fare, and his heartbeat is still synchronised with the rhythms of the shop floor.
"To my mind, to be a good wholesaler you have to be a good retailer. The wholesale relationship has traditionally been business to business not business to consumer, but unless you operate in the B to C world, your understanding of the consumer will be limited. Wholesalers generally buy stock in pallets and take a longer-term view without really considering the end consumer, whereas the questions a retailer asks are 'how much did I take today?' and 'how much will I take tomorrow?' Retail is faster paced, and with my background I wanted to introduce some of that into AW. We are increasingly talking to retailers about their consumers rather than ours; there's a different pace about the place now."
This new mindset is evident in all customer communication. For example, the group's Spar Real Deals mailer now expresses each promotion in terms of consumer saving, rather than profit margin.
"We want to influence retail behaviour and drive sales that way, rather than just shipping stock out as a wholesaler," he adds.
But the move to retail has changed more than just the brochures. A Eurospar supermarket, stocking about 6,500 lines, requires more than just a convenience range, so AW has expanded its portfolio, swelling the ambient inventory from 4,000 skus to 5,000, and doubling chilled to 800.
However, to make these larger ranges sustainable, the wholesaler needs to encourage a wider take-up from the independent base, and this is where Growing Taller comes in.
The idea is simplicity itself. By increasing the height of the shelves, retailers can stock a wider product range. A trial in two stores last year saw volumes grow by 10%, and Pattison recalls a similar project at Somerfield's Texaco forecourts which upped sales by 15%.
In fact, AW is so confident of the benefits that it is prepared to co-invest in it. "The total cost is about £8,000 per store, split 50/50 between us and the retailer," Pattison explains. "We ask them to adopt a range plan to go with the extra sales space, but we'd certainly be able to help if, for example, the increased range affected cash flow adversely.
"We already have the range, but we need to widen its penetration. We might not be able to move the walls, but we can use the cube better." In other words, literally adding an extra dimension.
Some 30 retailers have signed up for the rollout, which will have the knock-on benefit of improving the wholesaler's bargaining power. Pattison sees great potential for growth in product groups and pack sizes that have, to date, been outside the normal convenience orbit. For instance, AW's total produce turnover last year was less than that of one good Somerfield store, but the addition of the three Eurospars has already doubled volumes of meat and veg handled by the group.
"Because of the different store format, we can change the way that we do value we can now run offers on 18-pack toilet rolls, packs of nine pork chops and 5kg bags of potatoes. We are pushing more multiples-type products, rather than convenience lines, and customers wouldn't be expecting to see that from Spar. We have got to get people to think of us as a full-basket shop. And not just in Eurospar, in Spar stores too."
Perhaps a sign of the times, promotions are becoming increasingly important. A year or so ago there were only 20 retailers in AW's national promotions group, but now more than 270 have signed up, although Pattison admits he held a pricing gun, so to speak, to retailers' heads to encourage them. "We said that you will only benefit from the promotional buying price going in if you sold at the promotional price going out, and committed to taking the leaflet as well."
Flicking through the promotional leaflet, some of the offers are undoubtedly strong: 12-packs of Walkers crisps for £1.49, and New Covent Garden Soups for £1 during the same period, Pattison proudly informs me, they were on sale in Tesco for £1.49.
"There is a necessity to be competitive, but we also need to drive shopper perceptions," he maintains. "Consumers have to think they can get a good deal. And I believe that our brand presence and price presence have improved massively in the last year."
Asked to sum up his first nine months or so in charge, Pattison describes them as "great fun". Trading has been good; again, no figures, but Pattison assures me that sales in the last quarter were "broadly in line" with the 8-10% growth elsewhere in the sector.
This must be all the more pleasing as 2009 was something of a recovery mission for AW, as the group lost a major chunk of business when the Nearbuys chain went out of business in 2008. "But even on a two-year measure we are still in growth," explains Pattison. "I've been hugely encouraged by the attitude shown by our retailers. We have a strong order book and I've been taken aback by their ambition.
"I get a real sense that retailers want us to come and see them, and we receive a real welcome. The last thing a multiple manager wants to see is his managing director, but the difference is when I visit it's not to check up on staff, it's to help make things work better. I can't tell independent retailers what to do, it's all about how I support them and add value.
"Obviously, I'd love retailers to implement 99% of my planogram, but I also recognise that they have to sprinkle the magic on top, whether it's keeping a loaf for someone or helping out elderly customers. It's easy to forget that in many cases the local c-store is the local supermarket, and there's a different sense of what's important in more isolated communities."
Pattison has restructured much of the business, with the aim of being more efficient and effective. The wholesaler's retail and development teams have been brought together as one, and each member of the force is able to concentrate on a smaller number of stores. The local Spar Guild has also been given a new focus and injection of energy.
The warehouse has been re-organised too in this case not actually growing taller, although the rack heights have been recalibrated but an extra 600sq ft of space has been found to accommodate a wider range and introduce extra picking points. The finance department is also going up in the world to a new level, while the rest of the office has become open plan. "We're bringing the world together," jokes Pattison.
AW is looking for a net gain of a dozen independent stores to supply this year, and of course to keep adding to the company estate in both Eurospar and Spar formats, although this will only be at the larger end of the market.
"It will all depend on the opportunities, but it's not our intention to open company stores below 3,000sq ft," Pattison explains. "After all, we don't want to be competing in the property market with our independent retailers. We also have our new range to get into stores and we need larger ones to do that.
"There's a lot of new format work we can do through our estate, and we are prepared take some of the risk on this. Being prepared to break new ground is all part of leadership. We'd love to work with an independent retailer on a Eurospar, and we'd also like to buy a forecourt store as a lot of our retailers run these."
So we can expect growth in every direction, but particularly upwards.
But it's also true in other ways. For one thing, 'Growing Taller' is the name of a new initiative to raise shelf heights in independent stores in the South West in order to accommodate wider ranges. And there's also an elevation in the metaphorical sense, as the recent creation of a company-owned stores division has given the wholesaler an entirely new view of the world.
The retail venture kicked off just before Christmas with the opening of three Eurospar supermarkets formerly operated by Somerfield, where Pattison spent 17 years, most recently as a regional director, before joining AW last April.
The new stores at Keynsham and Minehead in Somerset, and Liskeard in Cornwall are shortly to be joined by a fourth, a 3,000sq ft former Woolworths outlet in Bridport, Dorset, due to open later this month under the Spar banner. The company is also looking at other potential sites, although expansion will be considered rather than rapid, with a probable opening rate of two outlets a year over the next five to 10 years.
Pattison declines to give much away in terms of sales figures for the new stores, other than to say that they are performing "satisfactorily".
"We knew from the start we would have to work these hard," he explains. "You have to bear in mind that the Eurospar brand is unknown in the high street, and under Somerfield the stores will have had TV drives, leaflets and promotion-driven sales to support them. There are also got some very good Spar stores close by."
But running their own stores is delivering benefits beyond anything they take through the till, by boosting understanding of their retail customers. In Pattison's words: "We get to eat our own cake".
"We are now in a position to understand from a retailer's point of view whether we, as a wholesaler, are any good," he explains. "We see at first hand issues such as product availability, whether the IT is working well, whether deliveries are on time, whether our marketing is effective, whether we are fit for purpose. We had no real measure of it before."
Product availability statistics are now sent out weekly to the 300 or so independent stores in AW's catchment area a neat triangle with Southampton, Bristol and Land's End as its points as part of the group's new retail bulletin.
"We want retailers to tell us when we're going wrong, but also to understand the facts," he says. "We want to be in a place where we can find solutions, and we need to be transparent to achieve this.
"We have to react to problems quickly, because we have to solve them for our own stores. We are now asking ourselves: is this how our retailers suffer? It's making us much more reactive, and we are increasingly talking to retailers about retailing, which as a wholesaler was pretty alien to us."
Pattison started his working life filling shelves at the local Fine Fare, and his heartbeat is still synchronised with the rhythms of the shop floor.
"To my mind, to be a good wholesaler you have to be a good retailer. The wholesale relationship has traditionally been business to business not business to consumer, but unless you operate in the B to C world, your understanding of the consumer will be limited. Wholesalers generally buy stock in pallets and take a longer-term view without really considering the end consumer, whereas the questions a retailer asks are 'how much did I take today?' and 'how much will I take tomorrow?' Retail is faster paced, and with my background I wanted to introduce some of that into AW. We are increasingly talking to retailers about their consumers rather than ours; there's a different pace about the place now."
This new mindset is evident in all customer communication. For example, the group's Spar Real Deals mailer now expresses each promotion in terms of consumer saving, rather than profit margin.
"We want to influence retail behaviour and drive sales that way, rather than just shipping stock out as a wholesaler," he adds.
But the move to retail has changed more than just the brochures. A Eurospar supermarket, stocking about 6,500 lines, requires more than just a convenience range, so AW has expanded its portfolio, swelling the ambient inventory from 4,000 skus to 5,000, and doubling chilled to 800.
However, to make these larger ranges sustainable, the wholesaler needs to encourage a wider take-up from the independent base, and this is where Growing Taller comes in.
The idea is simplicity itself. By increasing the height of the shelves, retailers can stock a wider product range. A trial in two stores last year saw volumes grow by 10%, and Pattison recalls a similar project at Somerfield's Texaco forecourts which upped sales by 15%.
In fact, AW is so confident of the benefits that it is prepared to co-invest in it. "The total cost is about £8,000 per store, split 50/50 between us and the retailer," Pattison explains. "We ask them to adopt a range plan to go with the extra sales space, but we'd certainly be able to help if, for example, the increased range affected cash flow adversely.
"We already have the range, but we need to widen its penetration. We might not be able to move the walls, but we can use the cube better." In other words, literally adding an extra dimension.
Some 30 retailers have signed up for the rollout, which will have the knock-on benefit of improving the wholesaler's bargaining power. Pattison sees great potential for growth in product groups and pack sizes that have, to date, been outside the normal convenience orbit. For instance, AW's total produce turnover last year was less than that of one good Somerfield store, but the addition of the three Eurospars has already doubled volumes of meat and veg handled by the group.
"Because of the different store format, we can change the way that we do value we can now run offers on 18-pack toilet rolls, packs of nine pork chops and 5kg bags of potatoes. We are pushing more multiples-type products, rather than convenience lines, and customers wouldn't be expecting to see that from Spar. We have got to get people to think of us as a full-basket shop. And not just in Eurospar, in Spar stores too."
Perhaps a sign of the times, promotions are becoming increasingly important. A year or so ago there were only 20 retailers in AW's national promotions group, but now more than 270 have signed up, although Pattison admits he held a pricing gun, so to speak, to retailers' heads to encourage them. "We said that you will only benefit from the promotional buying price going in if you sold at the promotional price going out, and committed to taking the leaflet as well."
Flicking through the promotional leaflet, some of the offers are undoubtedly strong: 12-packs of Walkers crisps for £1.49, and New Covent Garden Soups for £1 during the same period, Pattison proudly informs me, they were on sale in Tesco for £1.49.
"There is a necessity to be competitive, but we also need to drive shopper perceptions," he maintains. "Consumers have to think they can get a good deal. And I believe that our brand presence and price presence have improved massively in the last year."
Asked to sum up his first nine months or so in charge, Pattison describes them as "great fun". Trading has been good; again, no figures, but Pattison assures me that sales in the last quarter were "broadly in line" with the 8-10% growth elsewhere in the sector.
This must be all the more pleasing as 2009 was something of a recovery mission for AW, as the group lost a major chunk of business when the Nearbuys chain went out of business in 2008. "But even on a two-year measure we are still in growth," explains Pattison. "I've been hugely encouraged by the attitude shown by our retailers. We have a strong order book and I've been taken aback by their ambition.
"I get a real sense that retailers want us to come and see them, and we receive a real welcome. The last thing a multiple manager wants to see is his managing director, but the difference is when I visit it's not to check up on staff, it's to help make things work better. I can't tell independent retailers what to do, it's all about how I support them and add value.
"Obviously, I'd love retailers to implement 99% of my planogram, but I also recognise that they have to sprinkle the magic on top, whether it's keeping a loaf for someone or helping out elderly customers. It's easy to forget that in many cases the local c-store is the local supermarket, and there's a different sense of what's important in more isolated communities."
Pattison has restructured much of the business, with the aim of being more efficient and effective. The wholesaler's retail and development teams have been brought together as one, and each member of the force is able to concentrate on a smaller number of stores. The local Spar Guild has also been given a new focus and injection of energy.
The warehouse has been re-organised too in this case not actually growing taller, although the rack heights have been recalibrated but an extra 600sq ft of space has been found to accommodate a wider range and introduce extra picking points. The finance department is also going up in the world to a new level, while the rest of the office has become open plan. "We're bringing the world together," jokes Pattison.
AW is looking for a net gain of a dozen independent stores to supply this year, and of course to keep adding to the company estate in both Eurospar and Spar formats, although this will only be at the larger end of the market.
"It will all depend on the opportunities, but it's not our intention to open company stores below 3,000sq ft," Pattison explains. "After all, we don't want to be competing in the property market with our independent retailers. We also have our new range to get into stores and we need larger ones to do that.
"There's a lot of new format work we can do through our estate, and we are prepared take some of the risk on this. Being prepared to break new ground is all part of leadership. We'd love to work with an independent retailer on a Eurospar, and we'd also like to buy a forecourt store as a lot of our retailers run these."
So we can expect growth in every direction, but particularly upwards.
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