Last year we were pleased to have two London wholesalers to add context to The New York Produce Show program: Gary Marshall of Bevington Salads and Chairman of New Covent Garden Tenants Association and Chris Hutchinson of Arthur Huchinson Ltd. and Chairman of Spitalfields Market Tenants Association Ltd. They went on a tour of the new Philadelphia Market. You can see their perspectives detailed in our sister publication, PRODUCE BUSINESS UK:
Refining the Art of Wholesaling
This year we are delighted to have a wholesaler from Leeds, a bit over 150 miles north of London, join us. He is representative of a new, younger generation, both in the innovation he has shown in transforming his long established family business and in his assumption of industry leadership as he recently joined the board of the Fresh Produce Consortium.
We asked Tommy Leighton, Managing Director of the Pundit’s sister company in the United Kingdom, to find out more:
Richard Thompson
Director
Gilbert Thompson (Leeds) Ltd
Yorkshire, Great Britain
Richard Thompson is a director at family-run Leeds (Yorkshire) wholesaler Gilbert Thompson, which began trading in 1909. He also sits on the board of the Fresh Produce Consortium, the UK’s trade association for fruit, vegetables and flowers.
He runs the company with his brother Daniel. During the Global Trade Symposium at The New York Produce Show and Conference next month, he will talk about the various disruptive factors that have affected the wholesale trade in the UK over the past few years, look at the prevailing trends outside of the major London marketplace, and he will describe how his own company is taking an expansive route to future prosperity. Here’s a preview:
Q: Many people would say that, for a plethora of reasons, it is tough to open a new traditional wholesale business in the UK market in the current climate. But the Yorkshire Produce Centre took on another trader just 18 months ago. How is that going?
A: Thirty years ago, people said wholesale was finished and some still say it now. But we didn’t believe that and to this day, we see growth for our business and for the fresh produce businesses evolving around us. There are certainly far fewer businesses, but those businesses are a lot bigger – we’ve seen that in Leeds, especially.
Some 30 years ago, there might have been 30-40 companies, whereas now there are three.
H2H, one of the three companies remaining in the market, closed a couple of years ago, and we were left with just ourselves and Scrutons. So when the Gibbons family, which runs a local retail business, told us they fancied turning their hand to wholesale, we were happy to welcome them into the fold.
They formed Rhino Fruit Co and took on one or two of the former H2H employees, so they came into an established market with employees who gave them access to an established customer base. In the end, there was only really a six-to-eight-week gap between one company closing and the other opening. I think this illustrates that it is possible to open up a new wholesale market business and be successful.
It was good for the market as a whole, because to attract the full range of customers, we must have something for everyone, as wide a choice as is possible. It’s the same for markets up and down the country – there is an extremely diverse range of customers to serve, so there is room for every type of trader from the high-class caterers to the market traders, from traditional English produce to the latest exotics.
Q: Unusually for a family-owned wholesale business in the UK, though, you have expanded not just within your traditional marketplace, but into other wholesale centres in recent years. Why have you taken that route?
A: We began to expand in Leeds around 2010, when we supplemented our produce and flower businesses in the market with GT Prep, which prepares a range of vegetables for customers. We then opened a flowers and plants business in Sheffield in 2011, another Yorkshire city around 35 miles from Leeds, which operates under the same GT Flowers banner as our Leeds firm. This year in July, we have gone one step further, by buying Sharrocks, a wholesale fruit and veg business in Preston, Lancashire.
This is the first time that we have owned a business outside of Yorkshire, and it’s an unusual move for a family-run wholesaler in the UK. I suppose there has always been the fear that you could buy a wholesaler in a different market and all the staff would leave, taking the business with them. But Sharrocks was a fourth-generation family business like ours, with an established team and low staff turnover. It shared the same ethos as us – selling good quality produce at the right price and believed in the consistency of service, range and quality, as we did.
There was a particular set of circumstances that led to us buying the company. Sharrocks had grown into a £40 million business, but 60% of that turnover was earned by being the distribution hub for northern supermarket chain Booths. When Booths decided they wanted to take ownership of their own supply chain, they bought the business, but divested themselves of the wholesale business at the time by disposing of it to one of the existing employees. Within a short period of time, personal circumstances dictated that he was no longer able to run the business and Graham Eastham, one of the former owners, who we had a good relationship with previously, suggested us as a possible buyer.
So now we are the owners of that business, and we are looking to open up GT Flowers in Preston early next year as well. I think there will be a bedding-in period now, but we will always be interested in opportunities to expand further.
Q: It is undeniably rare for this to happen – why do you think you have become an exception to the general rule?
A: I think the reluctance for companies to expand is in part down to the age of management. A lot of the UK’s wholesale companies are being run by people who are 55+ and therefore at a stage of their career that they are not looking to expand. I’m 42, my brother is 45, and the other managers in the firm are all around 40. So we are looking at the next 15-20 years, not how much we can make in the next 12 months.
We also have the security of owning our own premises, whereas most companies in authority-run wholesale markets are not in control of their own destiny in that respect. They are being asked to commit to five and 10-year leases and do not know whether they might be asked to leave at some stage because their landlords want to move the market site. We bought the Yorkshire Produce Centre 15 years ago, we own the building and we lease what we don’t use ourselves out to the other tenants.
In the UK, there is only really Total Produce that has expanded geographically in the wholesale trade in recent time. They have bought up companies in and around the major traditional wholesale centres. There are companies that have invested in their own premises outside of the wholesale market environment – Sharrocks was one of the first to do it in the late 90s, Bristol Fruit Sales did it in the south west and McCarthy’s have done it successfully in Norfolk.
It’s a bold move to invest in your own premises in this business, but if you look at it, the people who have done it have been the more forward-thinking amongst the wholesale traders and largely they have done pretty well out of it.
At Gilbert Thompson, we’ve looked at other areas to improve ourselves too. We were an early adopter of IT, using some of the first hand-held terminals available. We invested in a Prophet system in 2009 and have continued to upgrade our use of IT, currently focusing on online sales channels.
We have also invested in our facilities; the latest example being a £100,000 spend on our coldstore in Leeds, which is halfway towards completion. Again, I think if you look around, the businesses that are moving forward are those that are showing the desire to reinvest money back into their business.
Despite the consolidation that’s taken place, or perhaps because of it, the businesses that are left in wholesale are stronger and often well-placed to invest. That’s the way wholesale is going, I think. Even though existing markets might continue to shrink a bit, you’ll still be left with decent-sized, well-capitalised companies that are investing for the future.
Q: What do wholesalers need to do to stay competitive in this ultra-competitive marketplace?
A: Wholesalers need to ensure they offer something for everyone. You can’t have a one-size-fits-all or one-quality-fits-all policy. There are some people who want the lower value and there will people who’ll always want that … but there are still plenty of people who are prepared to pay money for good quality produce. The key is to understand exactly what that level of quality is and to be ready with it when the customer wants it.
Delivering what the customer wants and [offering] value for the customer means different things to different customers. I think the industry is responding [well].
Q: Many suppliers around the world have lost track of the ways to supply the UK wholesaler during the past 30 years of increasing supermarket domination. There is clearly opportunity to revisit the sector – how should an international supplier go about finding it?
A: Any supplier looking to work with the UK wholesale market sector should do the research, to identify a business of a size and scale to be capable of dealing with your product.
Getting in touch with the FPC would be a good starting point, as they have good relationships across the wholesale sector, and they will be running a workshop for people wishing to supply the UK market at the London Produce Show and Conference in June, next year. There is always the traditional option of dealing with importers in the UK who have dedicated marketing desks for the wholesale markets, like Poupart.
You might not want to, or be able to deal directly with an individual wholesaler, but the marketing desks will have regular customers and can deal with branding and pricing issues for you, for instance.
Wholesale markets got a bad reputation for some years as the ‘dumping ground’ for produce rejected by the UK supermarkets. That does not apply now. Wholesale markets are mostly selling quality produce and often at prices that are competitive with other sales channels. Most wholesale operators also have an established year-round customer base these days too, so they are looking to carry a year-round offer of certain lines to service that. We still, of course, operate as that release valve for the industry at times of oversupply, when there is a need to find a home for quality produce without impacting on your existing customer network.
To neglect the wholesale markets is a mistake. I think any supplier from overseas should at least investigate how UK wholesalers can fit within their portfolio of distribution channels.
Thompson’s Ten:
Richard Thompson earmarks the top 10 disruptive forces he feels will impact on his marketplace in the years to come.
1) International politics – the two-way sanctions with Russia meant that a big growth market for produce was suddenly closed off. The regional wholesaler has no control of that, but we did get hit by the impact it had on produce supply and prices.
2) Food safety – the E Coli outbreak in 2011 that was originally blamed on cucumbers from Spain was actually nothing to do with Spain. But the media coverage that was generated put consumers off cucumbers and Spanish salads for an entire season, and wholesalers again took a big hit.
3) Immigration – this isn’t always looked on as a positive, but for the wholesale markets in the UK, immigration from Syria, Afghanistan and other places has boosted trade in some centres, because it has brought in new communities of people who want to buy large volumes of fresh produce through more traditional channels.
4) Legislation – We have no control over the UK government’s imposition of the minimum wage, and the more recent living wage and decisions taken in Europe on MRLs or Citrus Black Spot, for instance, can cause significant disruption.
5) Climate change – It’s had an effect already, but over the coming decades, the changes will undoubtedly change the sources we have for our products dramatically.
6) Technology – wholesale-market businesses have not been great at using software to progress, but nobody can ignore the impact of technology forever. Amazon is looking to deliver fresh produce, for example – how will wholesalers and their customers respond?
7) Production changes – while yields increase and GM foods reduce the peaks and troughs of supply, the ways for wholesalers to make money are reduced.
8) Obesity – it is at epidemic proportions in the US and becoming far more prevalent in the UK. Fresh produce could obviously play a big part in addressing it, and in the UK we are looking at a sugar tax, which could definitely create opportunities if it shifted consumption from manufactured foods to fresh produce
9) Population growth – The populations of sub-Saharan Africa, India and other developing nations are due to grow exponentially in the next 20 years, and as the middle classes in those countries create demand for more product, as an English importer, some of the products we take for granted will be harder to come by, or we might have to pay more. We can’t put our heads in the sand in the UK and think everything’s going to stay the same. It isn’t.
10) Food security – A lot of governments around the world are taking up the challenge of food security and how it is affecting their own populations. You can’t have a freely competitive environment and guarantee that your own population will be fed, so I expect changes there.
Regardless of the challenges, I’m confident the future remains bright and profitable for the UK wholesale sector for those players who remain flexible and adapt.
Many wholesalers still go home in nice cars to nice houses, so there’s still money to be made in wholesale, if you do it right!
*****
In a world being transformed, traditional points of entry into many markets are being transformed as well.
Part of the issue is the old definitions don’t work. To call Gilberts Thompson a wholesaler is true – but the word means something different when the scale is different. The company owns fresh-cut operations, floral operations, facilities in other cities and so forth.
Another part of the issue is that, with the growth of ethnic markets, internet shopping, foodservice and specialized retail – wholesalers suddenly have new roles to play in serving their customers and in facilitating producers who want to access the market.
What we most strongly note about Richard is that he is not content to leave things as they are. He wants to move his company and the industry forward.
He is right, if a bit coy, in saying that his relative youth plays a role here, but his vision plays a bigger one.
All too often people think of trade shows and industry events in a strictly short-term commercial sense, “can I buy or sell something on the floor.” There is a place for that, of course, but there is a bigger “win” in being able to engage with high-level minds, and with those building the future of the trade. The New York event is special because, in the business capital of the world, it provides an intimate setting where that really happens.
So come to New York, engage with Richard and the rest of the speakers, exhibitors and attendees. Begin building your business anew.
You can register for The New York Produce Show and Conference here.
We have our new Foundational Excellence Program that you can show your interest in right here.
E-mail us here to get a room in the headquarters’ hotel, perfect for high-level networking.
And find travel discounts right here.
