1. Chapter 3: operator insights
Grocery and Foodservice Wholesaling 2011
Chapter 3: operator insights

2. How to use this chapter Operator insights
The final chapter of the report provides a summary of the strategies of sector’s principal operators:
3663
Bestway
Booker
Brakes
Costco
Makro
Musgrave
P&H
Each summary typically includes:
Key facts: including details of turnover, profits, store numbers, operating model, customer focus and fascias
Latest developments
Trading priorities
Latest marketing

3. Catering and Foodservice
Operator
insights
Key Facts
Trading Priorities
Year to 30 June
2010
% change
Turnover (ex VAT) 1
£1,685m
0.4%
Operating profit1,2
£29.2m
35.1%
No. of depots
RDCs
Restructuring
Focus on efficiencies and cost savings to offset pressure on margins at a time of weak demand
Focus on sustainability
Increased customer interest in sustainability combined with high fuel costs makes providing environmental solutions key to building a value added service package
Focus on service
Development of a more responsive customer service, tailored according to customer needs
Surveys and regular tracking to enhance quality of service
Customer feedback insights shared across business
Depot and regional action plans to harmonise service levels
4. Private label
Private label range to be doubled over next four years, with PL products potentially replacing some brands
Thorough range review to improve quality of own brand products with new labelling to communicate quality
Aggressive innovation programme to support private label relaunch
5. eCommerce
3663 is preparing for the introduction of an online ordering service
Bidvest Logistics. 2 Post impairment and restructuring charges
Operating model
Delivered
Customer focus
Catering and Foodservice
Also trading as
Swithenbank
Latest Developments
When
What
So what?
01 Aug 2011
Introduces first electric delivery vehicle
Electric vehicles ideally suited to urban depots and routes where drivers need to frequently stop and start. Initiative will help meet customer requirements for a more sustainable supply chain
24 May 2011
Launches new 3663foodbook.co.uk social media website to support relaunch of Coronet range
The site includes individual profiles, blog posts, event and news and images for the 40 strong range of portion packs
12 Mar 2011
Relaunch and doubling of 720 SKU private label range over the next four years
Private label presently only accounts for 20% of 3663’s sales but carries higher margins than branded lines. A key goal of the latest range review is building a stronger private label focus
Latest marketing
New catalogue features enhanced imagery to communicate investments in product quality, top tips, a greater choice of healthier products in the Positive Steps range and QR codes to access additional information
Source: 3663
Source: IGD Research 2011 & company website
©IGD Excludes slides 1-5, 79-81

4. Operator insights Key Facts Trading Priorities Latest Developments
Year to 30 June
2010
% change
Turnover (ex VAT)
£1,990m
+3.6%
Pre-tax profit
£46.3m
+16.0%
No. of depots 61
1.6%
Building depot network
Bestway’s ambition to expand its depot network makes it stand out from other wholesalers
The company continues to make strategic acquisitions. In 2010 it bought Bellevue Cash & Carry and CJ Lang Wholesale (Martex), both based in Scotland
Infill depot development is also important to improve stock availability and increase distribution efficiency
Developing catering offer
Following its 2005 acquisition of Batley’s, Bestway is keen to build its catering offer
Ranges and service initiatives include the roll-out of butchery counters
Maximising retail trade
Refocusing on independent retail customers, with relaunched fascia kit and enhanced Retail Club. This now has over 2,200 members
Driving the expansion of the Best-One symbol group, particularly in Scotland
Further extending the private label offer to drive differentiation and build margin opportunities
New focus on petfood at Batleys with new Bestpets Local symbol group
Operating model
Cash & carry core, some delivery
Customer focus
Strong retail and limited catering
Also trading as
Batleys, Bellevue
Affiliated store group
Best-One
Latest Developments
When
What
So what?
04 Nov 2011
New depot openings
New 85,000 sq ft site in Brighton includes a full fresh offer, an on-site butchery. To be followed by new Gateshead depot in Spring 2012
03 Feb 2011
Launches Team 35 Drive promotion to mark Bestway’s 35 years in business
The promotion focuses on a range of top selling product lines with low discounts and extra rebates available to customers
27 Jan 2011
2010 financial results published
Wholesale turnover rose 3.6% in year to 30 June 2010 to £2.0bn, helped by expansion in Scotland and membership growth at the Bestway Group Retail Club. Profit before tax rose by 10.7% to £202.5m
Must see store
Latest marketing
Bestway Brighton: Bestway’s newest depot, providing the full Bestway offer and providing access services for the Best-one symbol group and Bestway Direct.
Team 35 Drive. Birthday promotion uses a Formula One race theme and focuses on top selling lines with every pound spent generating an extra 2-4% rebate depending on the product. The promotion is supported with comprehensive POS materials and
Source: Bestway
Source: IGD Research 2011 & company website
©IGD Excludes slides 1-5, 79-81

5. Operator insights Key Facts Trading Priorities Latest Developments
Year to 25 March
2010
% change
Turnover (ex VAT)
£3,596m
6.2%
Operating profit
£76.5m
14.9%
No. of depots
173
0.0%
Focus, Drive, Broaden
Focus by reducing costs to be the most efficient operator and simplifying the business: ‘less is more’
Drive: Choice up
Extending ranges, especially in fresh to offer market leading proposition in cash & carry
Building private label portfolio to provide unique products and differentiation
Drive: Prices down
Focus on maintaining price leadership in cash & carry
Extensive investment in roll-backs on 100s of products
Stronger promotional offers and better value ranges across all key lines
Long term price lock-downs providing stability to customers
Drive: Better service
Online ordering and delivery service provide customer convenience
Depot shop, online order and delivery now offers flexible, multi-platform service proposition
Focus on improving the whole customer experience through ‘PRIDE’ initiative: Parking, Reception, Internal, Delivery, Exit
Broaden
Extending business capability: building new areas of expertise to target new customer groups
Expansion in India, adding own depots and by joint venture
Operating model
Cash & carry core, emerging delivery
Customer focus
Retail plus significant catering
Also trading as
Ritter Courivaud, Classic Drinks
Affiliated store group
Premier
Latest Developments
When
What
So what?
13 Oct 2011
Interim results for 24 weeks ending 9 September 2011 show strong sales growth of 8.5% (6.5% LFL)
Strong growth across business, driven by focus on improved choice, service and price, and initiatives to broaden the group. 11 new Extra branches converted. Second depot opened in India New Direct businesses performing well and strong online growth
06 July 2011
Q1 trading statement shows sales up 9.5% (7.4% LFL)
Booker still driving growth despite weak consumer sentiment in UK, but benefited strongly from Easter and the Royal Wedding
19 May 2011
Booker reports full year sales up 6.2% (5.1% LFL) to £3,596m
Increasing sales by over £200m in the year, clearly Booker is generating stong and sustained growth
Must see store
Latest marketing
Euro Shopper: New campaign launched in May 2011, featuring basket of 11 Euro Shopper products that can be purchased for £5. Marketing support includes fress POS kit including posters, hanging panels and shelf cards. National adveristising in The Sun for the first time.
Booker Wholesale, Brighton: Core cash & carry depot, providing showcase for latest thinking and best practice, including upweighted fresh produce offer.
Source: IGD Research 2011 & company website

6. Operator insights Key Facts Trading Priorities Latest Developments
Building range
Aims to offer the widest range in foodservice (chilled, frozen, ambient, non-food and equipment) while retaining specialist focus in subsidiary divisions
Sector leading NPD is a priority, particularly in prepared foods
Acquisitions
Infill acquisitions to add further elements of product capability and extend customer reach
International expansion: already in France, Sweden and Ireland
Driving value offer
‘Switch & Save’ programme to promote well established Brakes own label – the largest range in the sector
Food & equipment promotions – customer pays for product and equipment is free
Nectar membership rewards loyalty
Customer focus
Evolving flexible national/regional teams to meet customer needs
Green agenda
Focus on sustainability, sourcing, cutting energy and waste
Efficiency
Driving operating efficiency to manage cost base through depot rationalisation and development of upstream consolidation
New partnerships with Mitchells & Butler and Compass Group
Year to 31 Dec
2010
% change
Turnover (ex VAT)
£1,799m
2.8%
Operating profit1
£25.6m
-62.8m
1 Post exceptional items
Operating model
Delivered
Customer focus
Catering and foodservice
Also trading as
Woodwards, Pauleys, Prime Meats etc
Latest Developments
When
What
So what?
25 Aug 2011
Launches web-based toolkit, with template marketing and promotional materials, recipe ideas and chef shopping lists
A dedicated British Food section of the Brakes website has been created, designed to help independent caterers capitalise on British Food fortnight
11 July 2011
QR codes introduced to strawberry punnets by Pauleys
Codes provide smartphone access to provenance information. The initiative has rollout potential for fresh produce and could be used to link to advice pages for chefs
12 May 2011
Announces new partnership with Nestlé Professional to cut road miles
Reciprocal delivery agreement set to save 82,000 road miles per year and points the way to further supplier wholesaler initiatives
Latest marketing
Downloadable menus for events
100s of products are available on promotion every month
Source: IGD Research 2011 & company website
©IGD Excludes slides 1-5, 79-81

7. Professional business
Operator
insights
Key Facts
Trading Priorities
Year to 29 Aug
2010
% change
Turnover (ex VAT)
£1,438m
2.3%
Operating profit
£20.7m
-5.1%
No. of depots 22
4.8%
Network expansion
Costco sees potential for expanding the UK network by 1-2 depots per year towards a long term goal of locations ,but has been hindered by difficulties in securing planning permission
Costco also aims to increase scale by extending existing depots and investing in underperforming warehouses to deliver sales uplifts
Food focus
Costco aims to build its position in food (particularly fresh categories) to balance the downturn in big ticket non-food
Building footfall
Promotional activity and price leadership in key commodities seen as key to gain higher spend in FMCG categories
Regular discount voucher offers used to compete against major supermarkets and maintain value positioning
Executive reward scheme introduced
International expansion
Costco plans to enter three European markets within three years with one new market in fiscal 2013 and two market entries the following year. France is the leading candidate with Costco hoping to open 1-2 stores by 2013
Efficiencies
Improved inventory management, lower levels of markdown, higher operating standards key to offset pressure on gross margins
Operating model
Cash & carry
Customer focus
Professional business
Latest Developments
When
What
So what?
06 Oct 2011
Q4 results reveal strong end to year
International was the main source of growth for the US-based operator, helped by new openings in Canada, Taiwan and Australia. Membership fees were increased in the US and Canada to fund new services, but no such plans have been announced for the UK
20 May 2011
2009/10 results published
Sales uplift, but slight drop in profit caused by investment in new warehouses. Core food, sundries and tobacco business performed strongly, helped by investment in fresh food areas, but BWS suffered from competitive pressures
Must see store
Latest marketing
Coventry: Costco’s largest warehouse, opened in August 2010, the wholsaler’s first opening in nearly two years.
Executive membership scheme entitles members to a 2% rebate on all puchases, capped at £400 per year. Membership costs £30 in addition to the standard Costco membership fee.
Source: IGD Research 2011 & company website
©IGD Excludes slides 1-5, 79-81

8. Catering & Professional business
Operator
insights
Key Facts
Trading Priorities
Focus on Horeca
Store refurbishment investment as part of Future Store programme
Significant range rationalisation, with new own brand products and caterer-specific ranges introduced
Continued focus on providing a market leading fresh and ultra fresh offer, and reducing general non-food ranges
Developing new sales channels
Team of field sales consultants introduced to advise and support customers on premises, and act as engines of growth
Delivery services introduced for foodservice stores from depots
Online investment
Investment in new look website
Online catalogue introduced providing access to full range
New web shop launched for professional catering equipment and key promotions. Further widening of e-commerce offer is planned
Customer focus
Rightsizing and rebalancing the business to make it more customer centric
Identifying and targeting specific trade customer groups and building targeted range capability to meet their specific needs
Cost savings
Creating buying benefits through joint sourcing via PalMak alliance (with Palmer & Harvey)
Introducing more supply chain efficiencies
Year to 29 Aug
2010
% change
Turnover (ex VAT)
£797m
-8.2%
Operating loss
(£17.9m)
n/a
No. of depots 30
0.0%
Operating model
Cash & carry
Customer focus
Catering & Professional business
Latest Developments
When
What
So what?
10 June 2011
Four out of five UK board directors replaced, including MD Hannes Floto
Klaus Raetttig is the new MD. The team’s top priority will be stemming declining sales and four years of losses while restructuring the business to focus on foodservice
14 Mar 2011
Makro Drive concept launched
New service enables customers to collect orders from two pilot local pick up points in addition to Makro stores - but abandoned by new management
1 Dec 2010
‘Tweet a Price’ twitter auction trial in run-up to Christmas
The more that customers retweeted a product, the greater the discount they could obtain
Must see store
Latest marketing
“Driveaway Giveaway”
To celebrate its 40th annversary, Makro is offering customers are the chance to win a van if they enter the customer reference order from their invoice each time they shop. Customers are also entered into draws every two weeks to win £100 vouchers.
Washington: Large format store providing access to the full Makro range of 30,000 SKUs. Includes a “Foodservice” delivery service that delivers orders direct to customers’ premises.
Source: IGD Research 2011 & company website
©IGD Excludes slides 1-5, 79-81

9. Operator insights Key Facts Trading Priorities Latest Developments
Core aims
Providing superior expertise and support services to independent retailers to ensure the success and profitability of the group’s core business
Strategic goals
To be number 1 or 2 in the sectors of the market in which it operates
To develop non-domestic operations to reach 50% of group turnover
To be Irish-based, family/employee owned and a non-quoted company
Range development
Developing fresh ranges is core to the group’s trading strategy
More focus on locally sourced products
Building healthy eating ranges and driving sales by actively informing customers with healthy eating advice
Reengineering private label to provide a modern retailer brand and bring focus to chilled and fresh lines
Efficiencies
Realising joint opportunities across the Budgens/Londis network
Enhancing supply chain compatibility in temperature controlled categories and improving service
Value
Building value credentials through budget range development and promotions
Localisation
Emphasise retailer links with local community to build differentiation
Year to 31 Dec
2010
UK turnover (ex VAT)
£1,373m
Stores serviced (UK)
2,361
Non-UK stores serviced
956
Operating model
Delivered
Customer focus
Retail
Affiliated store groups
Budgens (GB), Londis (GB) SuperValu (NI), Centra (NI), Mace (GB), XL Stop & Shop (NI), DayToday (NI), Daybreak (NI)
Latest Developments
When
What
So what?
29 Sept 2011
Clearance for Superquinn acquisition from Irish Competition Authority
Purchase will provide a new platform for growing sales in the challenging Irish market and boost Musgrave’s retail sales to near parity with Tesco
22 Sept 2011
Budgens cuts prices and price matches 300 key brands with Tesco
The move will reinforce the value element of Budgen’s proposition at a time of heightened price activity
14 Jul 2011
Invests £4m in chilled distribution capacity
Investment means entire Londis fleet will have multi-temperature capacity, enabling all Londis retailers to access the full range of fresh and chilled products
Must see store
Latest marketing
Londis Eltham: Store refit enhances convenience offer and creates more chilled space. Wide aisles create spacious feel for small store.
Launched in September 2011, Musgrave’s affiliated Budgens stores now match Tesco on a whole basket of goods, as well as lowering prices across the range to ensure competitiveness with the main stream of UK grocery retailing.
Source: IGD Research 2011 & company website
©IGD Excludes slides 1-5, 79-81

10. Operator insights Key Facts Trading Priorities Latest Developments
Improving efficiency to offset cost inflation
Network rationalisation and creation of multi-temperature sites
More automation and in-cab technology to improve driver efficiency
Integrating internal divisions to unify customer interface and simplify retailer interaction
Building Mace symbol group
Mace is the key brand within P&H’s symbol portfolio, and developing the brand and proposition is a key focus
Supporting the Mace own label with a promotional programme
Extending loyalty benefits and retailer engagement
Developing ‘Partnership Plus’ package for symbol groups with a stronger retail solutions package
Improving pricing
Consolidating price competitiveness on core lines to match cash & carry, for instance through new BOP scheme
Extending customer reach
Developing van sales services Snacksdirect and Sweetsdirect
Providing value added retail expertise services to non-specialist multiples e.g. oil companies
P&H will open a new depot in Hemel Hempstead to improve the level of service available to customers in the South East.
Year to 2 April
2010
% change
Turnover (ex VAT)
£4,031.6m
-4.8%
Operating profit
£26.0m
24.7%
Operating model
Delivered
Customer focus
Retail (multiple and independent)
Also trading as
Snacksdirect, Sweetsdirect
Affiliated store groups
Mace, Your Store, Super Shop
Latest Developments
When
What
So what?
08 Aug 2011
Launches ‘Best Outer Price’ (BOP) to sharpen pricing on tobacco
Innovative mechanic seeks to boost P&H’s sales base in the independent retail sector by providing a clear price advantage in this footfall driving category
17 Aug 2011
2010/11 accounts published
Cost reduction and efficiency initiatives have helped to offset contract losses, facilitated new investment opportunities and revived operating profits
04 Jul 2011
Martyn Ward appointed as new sales & marketing director
His long career in FMCG, and background across many sales channels provides a platform for bringing greater focus to the business
Latest marketing
Best Outer Price: New mechanic offers increasing savings on tobacco products linked to size of orders for non-tobacco products, with free delivery now included. Scheme targets orders sizes of over 250 non-tobacco outers, but benefits still available to 150+ orders.
Source: IGD Research 2011 & company website
©IGD Excludes slides 1-5, 79-81