Mergers and acquisitions may bring about consolidation of sorts within the wholesale sector, but they do not need to signal the end of competition, says Total Produce’s operations director Graham Broomhall. Speaking in Nottingham last week, he explains: “Even though we have become the largest player in this market, we recognise that we have to invest to continue to give customers what they want. That means offering the right range, employing the right sales people and providing the storage and environment to suit all products. We want them to walk in here and buy everything, so we have to have everything.”
Redbridge Holdings bought George Smalley, one of the leading names on the East Midlands wholesale scene, in mid-2006. Once the Total Produce deal was struck in early 2007, the Smalley group of companies moved seamlessly into that fold. “Smalley’s was a very good company; it perhaps just needed a bit of a lift and a revamp,” says Mick Begg, branch managing director, who previously ran the Fyffes pitch in Nottingham and has been in the city’s markets, new and old, since he was 16. “We traded for a full year as Smalley’s, then merged the five Fyffes and four Smalley’s units into one business.”
“Smalley’s was a first-class company and had, in George Smalley, been run for a long time by an icon,” says Broomhall. “This really was a classic example of a win-win; if ever there was a win-win model, this was it.”
The development process also saw the purchase of the Flower Vision space that split the two along one side of the 14-year-old Clarke Road site, which stands between Notts County’s Meadow Lane football ground and the city’s incinerator - near the banks of the River Trent. A year on, and the eight units of space have been turned into one huge Total Produce unit, with two temperature-controlled cold chambers and a banana-ripening room.
Begg says: “We worked very hard to maintain what we had with an excellent group of suppliers to Smalley’s and our own existing group of suppliers, as well as keeping the customers we already had happy, and the same highly experienced staff around us.” It clearly worked. Broomhall says it is accepted that there will always be a percentage fall-off in the supply and customer base when mergers and acquisitions like this take place, but that Total Produce in Nottingham has retained 95 per cent of the newly acquired business.
“To be able to put this level of investment into two strong companies has served to make both companies better under a single banner,” says Begg. “We have retained everything that was good about the old firms, and that is easier said than done.”
New customers and suppliers have come on board too, he adds. “We are getting more all the time, and that is because between us, we have combined to offer such a good service. On top of what we offer in the market, we have three 18-tonners and two 7.5-tonners on the road and our delivery service is second to none - two hours after selecting the product on the pitch, it can be where it needs to be.”
Successful succession
Nottingham is no different from the rest of the provincial markets, in that firms consistently find it tough to attract the younger generations in to their midst, for all the well-documented reasons. But Begg can justifiably point to a “young team”, even if that has to be appended with relatively general terms. “Three of the team are in their 30s, the majority are in their 40s, and a few are a little older,” Begg says diplomatically. “Every salesman here began as a porter in the market, which you could argue is the height of succession planning. We also have a porter, Ian Jackson, who has been with us 28 years, and a couple of porters with us now who are showing great potential - of course, we encourage that.
“Many of these guys are irreplaceable - once customers find a salesman they like, they stay. I am not sure where the second string is though. You either like this trade or you don’t, there is no halfway house. When we recruit, we don’t generally have to go out of the circle, as there are always people who worked here years ago who are looking to get back in.”
The staff in the cashier and sales offices have also more than proved their longevity. Both Jane Hollands and Lisa Allen have been cashiers in the company’s different guises for well over a decade, and Alison Peet has been in the sales office for nearly 30 years. “We are very lucky to have people with such commitment involved. We have built a well-known team with a wealth of experience,” says Begg.
Identity
While the Total Produce strategy is to roll out its identity across each of its wholesale operations, the nuances of each market have been recognised and each is at a different state of development. Walk inside the Nottingham branch and you will be in no doubt which company you are trading with, as the new livery is omnipresent. “Nottingham has as strong a Total Produce identity as anywhere in the country,” says Broomhall, and Begg adds that, already, the majority of customers have recognised the new identity, as opposed to continuing to refer to the old firms. “They call us Total Produce, no question,” he says. “The transition really went very smoothly and there were no major hiccups - but not without a lot of hard work. It doesn’t really matter what we’re called, but I guess with Total Produce, suppliers and customers can see we’re here to stay and we have the right backing.”
The customer network includes high-end independent retailers and a “reasonable percentage” of the product goes through retail market stall traders. The catering trade is well developed in Nottingham and its environs, but has experienced a static period as the corridor that stretches from Leicester to Sheffield has suffered as badly as anywhere in the country during the economic downturn.
Processors are good customers too, says Begg, and the market’s day is split into two “waves”, the first between 1am and 6am, which typically sees the traditional and distributive sides of the business being done, and a second, from 7.30am to 10am, when the strong ethnic trade in the region prefers to do its shopping.
Nottingham accounts for 60-65 per cent of the business, says Begg, but customers come from as far afield as Birmingham, Leicester, Spalding and Chesterfield. In a part of the country that is not short of wholesale markets, customers have a lot of choice and, particularly for those that do not visit the markets and are looking for deliveries, this creates intense competition and ensures that each market must have a very good idea of prices elsewhere to stay in line and remain attractive.
“There are only three fruiterers here,” says Begg. “But competition is fine internally and the external factors ensure that everyone is on their toes.”
Broomhall agrees: “Price comparisons are almost instantaneously available around the country now - if a product is trumpy or short on any market, people know, and they will take advantage of those situations.”
Clean-cut approach
“Just because it’s a wholesale market, it doesn’t have to be scruffy,” says Broomhall. “This branch shows that. It is a clean, tidy and bright environment to work and buy in. There is no room for complacency and we have an obligation to raise standards at all times for our customers.
“I think people have seen the quality raised as well,” he continues. “They obviously don’t come here to buy rubbish any more - but they can come here and buy a full range of product and see how they can make a profit out of it.”
A big part of raising the quality bar is the new storage capacity, which has given a “phenomenal” fillip to the business, according to Begg. “We had storage before, but this shows customers just how much we need business. A company called ACS installed the rooms and I cannot reiterate just how fantastic a job they, the builder, who very much worked around us, and the electrician did for us. We traded throughout, which was difficult, but we got through it and now we are seeing the benefits.
“We purposefully invested heavily in the lighting and talked to various electricians about the right system to use, because we feel that being able to see the product properly is a huge help to everybody. These are exceptional facilities now for a wholesale market.”
To support the on-site facilities, the company’s delivery service has also just been awarded a second certificate of excellence by Futura Training, which assesses the competence of its drivers.
Credit insurance is becoming a far bigger issue, as insurance companies are looking more closely at companies in this financial climate, says Broomhall. “This is not deriding the customer base, but the financial world is taking a look at our business and assessing risk,” he explains.
“We want our suppliers to assess the risk when they decide who they supply to on the basis of people who are likely to pay, and therefore we are obliged to take the greatest care possible with our customers.
“Obviously, we have to take a view on each customer, because if you take this to the nth degree, before very long there would be hardly anyone to serve. But any bad debt has a knock-on effect on the whole business.”
Begg adds: “I think you have to be a bit cute about it. We obviously talk to customers every day and we have sales meetings every week, so we are aware of the position all of our departments are in. Our customers know we do the job properly and it is a two-way street.”
The Total Produce flower business was shut down earlier this year because the firm believed there was no value left for them wholesaling flowers in the market. “Fruit and vegetables offer great value,” says Begg, “but flowers are a luxury purchase and we have seen that in the last few months - I am not convinced we will see the wholesale flower business recover.”
Model to follow
The practical floral decision aside, however, Nottingham has shown the full-steam-ahead approach that will pervade all Total Produce branches very quickly from this point on. “We hope wholesalers around the country look at what we are doing and realise that to survive and move forward, you simply have to be prepared to invest and run these types of businesses,” Broomhall concludes.
“Nobody else makes this type of investment [in wholesale markets]. What we have achieved in Nottingham in a provincial market is first class. This is the model of what we believe is needed in a market and the type of facility we think customers want. When they come here at 2am, it is well lit and the products are soundly stored, and they can deal with very capable people.”
MARQUES SPARK BANANA TRADE
Wally Pitylak runs the banana section of the Nottingham branch. “I have got the best marques and that is key in the banana trade,” he says. “A label like Fyffes, Chiquita or Turbana obviously makes the fruit taste that little bit better and there is no doubt that the right brands allow you to make a small premium. I cannot wait for Nike or Adidas bananas to make an appearance!
“Prices are at 1250p to 1400p a box at the moment and I think they will get worse before they get better. It is largely down to the exchange rate and most people will have a decent understanding of that. There is always light at the end of the tunnel - you just need to find the switch.
“What I do hope, though, is that this situation does not encourage some of the cheaper bananas onto the market in big volumes,” Pitylak adds. “People are more fussy these days - yes, they want the product to look pretty, but you take the skin off a banana before you eat it."
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