United Wholesale Scotland is investing heavily in technology and people to ensure that it continues to deliver what its customers need to be successful, explains managing director Chris Gallacher.
From its bold and often controversial marketing campaigns to its ‘Warehouse of the Future’ digital concept, United Wholesale (Scotland) has always prided itself on being a trailblazer in the world of cash & carry.
And now, under the leadership of managing director Chris Gallacher, the Glasgow-based wholesaler has introduced two more industry firsts: YUU, a free home delivery platform for its retail customers without any of the usual ‘last mile’ liabilities, and EchoPay, an open bank payment facility developed by former C&C operator James Ward that means United can avoid Visa and Mastercard charges. [See end of article for details of YUU and EchoPay.]
The development of YUU in particular has involved the appointment of several tech-savvy employees, who along with new senior executives within United’s financial and trading teams have significantly bolstered the business’s expertise so that it can continue to exploit market opportunities and attempt to stay ahead of its competitors.
In an exclusive interview, Gallacher spoke to Cash & Carry Management’s managing editor Kirsti Sharratt about United’s new initiatives, recent performance and plans for the coming year.
How did United perform in 2021 [to the end of December]?
We finished at £274 million – a record year. Even compared to 2020, we increased our sales. In 2021 we thought we were going to be benchmarking against 2019 [turnover: £235 million] because no one ever thought that they would beat the first Covid year. But we absolutely did – we beat 2020’s turnover by half a million pounds, which was remarkable. We’re just finalising our 2021 profits but it’s looking like a record year for profits too.
What were the key factors that contributed to those results?
By helping our existing customers through 2020 when availability was pretty difficult, we held on to them last year. We also held on to a lot of our new business, especially at our M9 depot in Grangemouth which doubled its sales during the pandemic.
A lot of previously delivered-only retailers saw their turnover soar during the pandemic, and their symbol operator just couldn’t give them extra deliveries so they had no alternative but to go to a cash & carry. And a lot of those retailers chose to come to our M9 depot because it is so central – we were getting people from Edinburgh and even from as far as Aberdeen. Our team looked after these customers so well that sales have continued to improve.
We also managed our stock position very well. We don’t have a distribution centre – everything comes direct from suppliers to all three depots (Queenslie, Maxwell Road and M9) – so when things did get tough in the supply chain, we already had the stock in the buildings.
From time to time, we did do inter-branch transfers – we could react on a daily basis – and that benefited us because we could ensure we had key lines available in all three depots.
How are sales so far this year?
Our non-tobacco sales are within the company’s expectations. Tobacco is slightly down but that has been budgeted for, based on the world opening back up.
How is your cash & carry business doing compared to your delivered operation?
Cash & carry accounts for over 70% of our turnover. Although our delivered sales did grow during the pandemic, most of our increase came from cash & carry because of delivered customers topping up. We had invested in our cash & carries before Covid hit, so we were in a good place. Our Queenslie depot won the Achievers 2022 award of Best Cash & Carry.
Half of all the retailers in Scotland shop at United, and we’re very much focusing on giving our customers a better cash & carry experience – making sure that they can get through the depot quicker than they can in our competitors’ depots.
All our branches have seen a rise in turnover year on year. Maxwell Road is where it all started for United and its turnover is roughly the same as at Queenslie which is bigger. At Maxwell Road you can see the same customers in there several times a day!
What does United offer unaffiliated retailers that’s different from, or better than, your competitors?
We carry nearly 11,000 lines – we’ve got the biggest range in Scotland – and we know that we’re competitive on price. We use a company that measures the price on every single product we sell, and it benchmarks us every quarter against our competitors. Our customers know that all three depots have the same prices, and the price they see is the price they pay – we don’t do any trading.
On the subject of price, how are you managing the current price increases?
We’ve got to increase our prices as suppliers increase theirs. A big challenge at wholesale is talking to suppliers about shared margin: we have to make sure that the prices of price-marked packs protect our margin as well as retailers’ margin.
With the rising cost to serve, how can you continue to provide deliveries at cash & carry pricing?
The simple answer is that we continuously need to look for efficiencies. Our delivered prices are the same as our cash & carry prices, our minimum order is 35 cases so it’s very small, and we have no delivery charges. I’m not saying that this will be our position for ever – fuel costs are concerning and who knows what’s going to happen in Ukraine – but we don’t plan to change it for the moment. Also, every order is now placed digitally – everything goes through EPoS, app or web.
In terms of efficiencies, last year we invested in Maxoptra fleet routing software, and earlier this year, we invested in a compliance system called FleetCheck, which involves the drivers checking their vehicle every morning. That helps our head of operations make sure that we’re fit for purpose, and if VOSA (Vehicle and Operator Services Agency) comes in to see us, we can show we’re compliant.
On top of all that, we’ve got Vision software that deals with tachos [tachograph rules], Exeros live onboard cameras in every vehicle, and SeeTrack, which not only tracks our lorries but also produces reports on harsh braking and other driver behaviour.
Which of your depots offer a delivered service?
Two years ago we made the decision to take all of our deliveries out of our depots and use a delivery hub instead. We’ve got a distribution warehouse at our head office at Queenslie – it’s attached to the cash & carry and has over 300 lines in a fast-pick area; anything other than that we go to the main depot to pick.
We’re now using a back shift for deliveries – we pick from 6pm to 3am, load from 3am to 6am and then the lorries go out. We’re coming up with strategic ways to be able to do second deliveries with the fleet [12 x 26-tonne lorries] we’ve already got. We want to get the lorries out at 6am, get them back to the depot and out again in the afternoon. It makes sense to sweat the lorries as much as we can. It’s pointless getting another 10 trucks and going to Inverness when there’s enough business to be had in the central belt.
What are the most recent developments at United?
We’ve added extra resources to our trading department: we’ve brought in Telly Sarai [formerly general manager at SK Food & Drinks] to manage the licensed category as trading director, and we’ve just appointed Chris Hewitt [currently trading manager at Parfetts] as trading director to look after impulse.
We want to focus on certain key growth areas where we feel we can do better. As a result, trading director Ali Afsar has moved across to help develop grocery, freeing up senior trading controller Sherry Khan to concentrate on other categories, mainly fresh and food to go. Anshu Chandra has been promoted to commercial director to head up the entire trading team.
We’ve also built a support team around me. We’ve appointed a financial director Chris Boyle to get under the skin of the business and help us develop for the future. Chris, who reports to chief financial officer Osmond Ramsay, previously worked at Botterills Convenience Stores and is a really good fit for our business – he understands the nitty-gritty of wholesale and retail.
We’ve also brought in a chief technical officer Florin Mandache and a new ecom manager Sarah Gordon to help develop our technology. And we’ve recruited a new marketing manager, Hollie Fraser, who starts in June.
We’ve therefore invested in a whole ecom/marketing team – in wholesale today you need that level of expertise so that you don’t get left behind. Our YUU business-to-consumer platform is on a different level to the United app and website, but there’s no reason why we can’t bring these business-to-business platforms up to the same high spec as YUU.
Asim [Sarwar, former managing director] is still very much involved in the business. He’s in here every week and we have a monthly board meetings where we give him the numbers. He lets us get on with it, but keeps a keen eye on us to make sure that we’re hitting company expectations!
Apart from introducing YUU and EchoPay, what other developments have there been technology-wise?
We’ve just signed a one-year deal with TWC to use the Smartview data system. From June, we’ll be able to share rich data with our suppliers. The joint business plans that we create have got to be meaningful; we will use data to drive our sales together more profitably and that’s going to be a massive change in culture for us at United.
Our digital screen business United Digital also offers great opportunity, not only for digitalisation in our cash & carries, but also to find digital solutions for our retailers. We’re also now working with some of our competitors – Coca-Cola is one of our clients and they’ve asked us to do some work for Parfetts and Dhamecha.
What are your priorities for the coming year?
The biggest priority now is managing the cost-of-living crisis. We have to focus all our efforts on ensuring that our retailer customers continue to make a profit so that they can have a sustainable business.
We’re finalising our new Value booklet, which suggests own-label and value alternatives to the major brands to appeal to cash-strapped consumers. If we don’t help and educate our retailers to compete with the multiples and the discounters then they will lose share.
We also have to try to become more efficient in our own business. We have tied up deals for this year for electricity and gas and we’ve just invested in a new EMS (energy management system) called Pilot.
At the same time we’re becoming a more sustainable business. We now buy green energy rather than brown energy, we harvest rainwater to clean our vehicles, and we’ve worked with JTI to educate and establish green champions in our head office and all our depots.
How are you developing your Day-Today and Usave symbol groups?
Jason Macleod, who was working in our merchandising team, is now head of symbol. We have a symbol controller and we’ve got four development managers out on the road. We’re working with the customers who want to work with us. That’s our focus more than ever because of the squeeze on the cost of living and the legislation that’s round the corner, whether that HFSS of DRS – these things are going to have a massive impact on the retailer. There are major headwinds coming our way.
We’ve already refreshed eight Day-Today stores internally and externally this year and we plan to update more. We’ve got a recruitment target this year of 25 stores for Day-Today and 40 for Usave. We do not charge retailers to be part of Day-Today or Usave.
Any plans to invest in your own retail stores?
Definitely not. There’s enough to be doing in wholesale to help retailers without having our focus taken away by trying to be a retailer ourselves. We do have two stores of our own, which United acquired years ago, but we’re not looking for any more.
Are you developing your product range in any way?
In addition to food to go, fresh and value products [see previous answers] we’re going to focus heavily on vape this year. The vape category seems to change every day and if you don’t get on top of it and don’t educate retailers, then you are missing a massive opportunity. There’s also big potential for cocktails and premium drinks – people may want to buy own-brand macaroni but they also want to treat themselves.
You worked for Booker for nearly 17 years (and then independent retail business Scotfresh) before joining United four years ago. How is it working for United compared to Booker?
The resources are not the same for a family business as a big national, but it’s much easier working for United because we’re very nimble – we can make changes quickly and that’s a big strength. And before I got into the MD’s role at United, I didn’t fully understand all the different components of the business. But with Asim as my mentor in the early days, now I do and that’s been great for me.
I was head of retail in Scotland for Booker and now I’m MD of United, so my job now is definitely more stressful and my work-life balance is not where it should be – my wife would agree with that and so would my kids! I’m fortunate that the team I’ve got at United is very good – it’s an absolute pleasure working with them. However, I loved my time at Booker and my foundations were built there: people like Charles Wilson, Steve Fox and Andrew Muldoon taught me a lot from my school days onwards.
How would you describe your management style?
I treat people the way I would want to be treated. I’m very much someone who gives people space to make decisions while providing strategic guidance and support. I found out very quickly that you’re better bringing people on board that know more than you – that’s how you’re going to get success in the business.
One thing’s for sure – I will always be there for my colleagues. My door is always open.
United in numbers:
£274 million turnover in 2021 (£273.5 million in 2020; £235 million in 2019)
70:30 cash & carry sales versus delivered sales
3 cash & carry depots (Queenslie, Maxwell Road and M9)
2,500 unaffiliated C&C customers
248 Day-Today stores
252 Usave stores
1,200 users of United’s app, including 480 users for deliveries
12 delivery vehicles
United removes the barriers for home delivery for its retail customers
To help its retailers fight back against the dark store operators, United Wholesale Scotland has developed its own home delivery platform, YUU.
Day-Today retailers are being given YUU free of charge, to allow them to offer a home delivery service without the ‘headaches’ associated with the last mile.
The consumer enters their postcode, and the YUU app comes up with the Day-Today stores in the area. The consumer then chooses a store and places their order from the PLOF for that store. The store has an API (application programming interface) with GoFor – the last mile operator – and delivery is within the hour.
“I believe that we’re the only wholesaler offering this type of home delivery platform, not just in Scotland but in the whole of the UK,” said United’s MD Chris Gallacher.
“We launched a marketing campaign in Glasgow in May and we’re going to test and learn for three months with the 55-60 Day-Today stores in the city. We then plan to roll YUU out to the whole Day-Today estate in Scotland.”
The prices consumers pay are slightly higher than those in store, and United will use any profits it makes to cover the last mile and for marketing.
Explaining why United decided to develop its own home delivery platform, Gallacher said: “We asked some of our retailers why they weren’t getting on the crest of the wave by moving into home delivery. The biggest barriers were having to invest in their own delivery vehicle and get a driver. Our aim was to remove those barriers.
“The dark stores are in London and they’re coming north,” he continued. “As a wholesaler, we’ve got to try to protect our symbol customers and make sure that we give them the tools to be able to compete.”
Lower payment charges
United Wholesale Scotland is encouraging its retailers to use the open bank app EchoPay to pay for their goods.
“We incur a small charge but it is a lot less than the 0.3% charges from Visa and Mastercard, and the speed of service is much faster for the customer,” explains United’s MD Chris Gallacher.
EchoPay was developed by former C&C operator James Ward. “We worked closely with James on EchoPay and so we got six months’ exclusivity,” Gallacher reports.
“Before Covid, retailers used to come in with bags of cash to pay for their goods but they now use debit cards, so we anticipate that EchoPay will become massive in cash & carry.”Published Date: May 24, 2022