In his first big interview since becoming managing director of Unitas Wholesale, John Kinney (pictured) talks to Cash & Carry Management’s managing editor Kirsti Sharratt about the next phase of the group’s development and its focus on being more member-centric.
Unitas is currently conducting a full-scale strategic review headed by managing director John Kinney, who is determined to ensure that everything the group does is for the benefit of its members. Cash & Carry Management spoke to him to find out more:
Since becoming MD in April, what changes have you made at Unitas?
Most of the changes have been internal. For example, I have created a new commercial team headed up by Julian Smith, who was formerly senior trading controller. He reports directly to me, and his team’s role is to analyse the activities that we do to make sure they are driving real value through to our members. They are initially evaluating the benefits of our promotional schemes.
Quite importantly, we have also changed some of the operational practices within our finance department to ensure we are rewarding our members with a much improved cashflow situation. We have a new finance director, Richard Bone – a fresh pair of eyes. The operations are now more structured; for example, the way we do end-of-year reconciliations and the way we pay our retro payments are more beneficial to our members.
Fundamentally, what we have started is a complete review of the strategy and culture of the group in order to become more member-centric. In the first couple of years following the merger of Today’s and Landmark, our priority was pulling the two companies together – the systems, operations, back of house, IT platforms, service providers, etc. This is now phase two.
A couple of weeks ago we had a two-day strategy session with our board to look at what the business is doing, where we want to go and how we want to get there. We are working out what things we want to maintain, what we want to ditch and what we want to do differently.
Mark Aylwin [newly appointed chairman] has been a very good sounding board. It has been the right time to bring a non-member chairman into the fold to challenge the old way of thinking.
What are your priorities for the rest of this year?
As we move away from the demands of the Today’s/Landmark merger and dealing with COVID, I am focusing on driving that member-centric approach and member-centric culture. I would challenge whether everything we did before was delivering member benefit.
We have a plan that everybody in the centre will spend some time out in our members’ depots to understand the wholesale environment and how what they do affects our members. It is very easy to get lost in a head office culture, but this is not a head office, this is a support centre for 159 companies.
For me personally, although my former sales & marketing role covered the whole group, I come from a very retail-oriented background, so a priority for me has been to get up to speed with the needs and requirements of our out-of-home members.
You have members on your board and you are going out to their depots. Do you have a more formal way of finding out what they want from the group?
That is something we are looking at: building a structured member survey, where we can gather information (at least annually) about what our members want. We will also ask them to rate how we are performing and how well we are supporting them.
We are also continuing some of the initiatives we set up during COVID, like our category committee meetings (impulse, retail, grocery & non-food, licensed, foodservice and on-trade). These are held every four weeks or so, and are a great way of getting feedback from our members.
The policy introduced by Unitas last summer that members could not also be part of other buying groups led to the departure of several wholesalers. Did you agree with this policy when it was introduced, and what has been the impact of this policy?
Yes, I did agree with it, and I stand by that decision. I genuinely think it strengthens the group. If we are asking suppliers to invest in the group and support activities that we run, they need to know who is running those activities and how they are being run. We wanted members to support the group, not to decide which parts they wanted to support and which parts they didn’t. The impact of the wholesalers’ departure was marginal compared to the benefits and clarity we have been able to provide to suppliers.
But isn’t that part of being a member of a buying group – they can take what they want out of it?
Absolutely, but it is about being reasonable with that.
The strength of retail versus foodservice and licensed within Unitas also led to the departure of some wholesale members, notably Hyperama’s foodservice business. How are you making your offer sufficiently attractive for foodservice and on-trade wholesalers?
We have a very diverse foodservice membership base. Being able to cater for every foodservice member’s needs is a massive challenge, so it’s about finding what works for the majority.
We are not looking at consolidation within the group in respect of going down the retail-only route: there will absolutely be a role for foodservice and on-trade going forward, and we believe there is a significant opportunity in both those areas. What we are working on now is how to maximise that opportunity.
In the case of Hyperama, we weren’t able to achieve what they wanted from us [most of Hyperama’s foodservice business came from suppliers that did not have central terms with Unitas]. We are now deciding if that was a missed opportunity – we are conscious that we lost a good operator. We don’t want to lose any foodservice member but if we think it is not viable for us to do that [have more foodservice suppliers on central terms], we won’t do it because we can’t be everything to everyone. Realistically we are looking at a few months before we are able to announce whether we’re going to expand our offer or maintain the offer we have.
Did your gesture to reduce fees by 30% for foodservice and on-trade members for 2021/22 go down well with the members concerned and will you maintain that reduction?
The feedback we received was very positive and we intend to review our fees on an ongoing basis. The centre isn’t a profit centre – if we can reduce our cost base and membership fees, we will look at that for all members.
You have changed the format of your trade event (30 September to 1 October at ACC Convention Centre, Liverpool) to an awards dinner and one-to-one meetings. What response have you had to this event?
It has been very well received – we are virtually sold out. We couldn’t run a traditional trade show because of space constraints, but we were very conscious that face-to-face relationships between suppliers and members haven’t been there for quite a while so we were keen to get these activities going again. We will run the event next March as a trade show if we can – that is our preferred format – and we have booked our overseas conference for 16-20 September 2022 in Tenerife.
Congratulations on being voted No.1 buying group in the Advantage Group survey for the second year running. How have you managed to maintain supplier relationships during the pandemic?
Coming first again was a fantastic result and really does reflect the work that the trading team have put into managing their relationships with suppliers. The role for us in the early part of the pandemic was about facilitating communications from the suppliers to our members on supply issues. It then morphed into the day job, so we set up regular meetings where suppliers were able to talk to our members about their situation and their plans.
What do you see as your strengths in dealing with suppliers compared to other buying groups in ‘normal’ times?
Our approach with suppliers goes beyond simple transactional relationships – we go out of our way to understand their strategies and plans, and we develop joint business plans. We don’t take a one-size-fits-all approach.
Going forward, suppliers need to be more appropriate with sector-specific plans and not just try to shoehorn in what works for the mults. We want to see suppliers respecting this channel with both their products and resource. Everyone was keen to jump on the convenience bandwagon when they saw the growth during COVID, so let’s see suppliers reflecting this in the long-term.
How well is Brand Box, your initiative for suppliers to get their NPD into 1,000 stores (Today’s, Lifestyle and Day-Today) at launch, working?
It was delayed because of COVID. We launched it as we came out of lockdown but it had its challenges: lots of retailers didn’t want us going into their stores. We have run four Brand Box campaigns so far, with two out of three stores participating. We would like it to be higher, but considering everything that has been going on with the pandemic, we are quite pleased with how it started.
Fundamentally it is the right thing to do – the scheme is trying to de-risk distribution of NPD into retail outlets and make sure we do not miss the peak opportunity to feature the NPD [when suppliers are backing it with advertising and marketing activity]. Suppliers have a backlog of NPD because of COVID, and our next Brand Box campaign is scheduled for later this month when we have seven suppliers participating.
We still do our scorecard in terms of NPD and indeed we are even more challenging. Just because a product has been offered doesn’t mean it is the right thing to push out to our retailers. We will turn down NPD if it is not right.
We are looking at how Brand Box can be used in out-of-home outlets.
What about your Picture Portal scheme – how is that going?
It is going well. Picture Portal is used to capture real-time examples of promotional execution and activation across our membership. It is used to drive distribution as well as compliance. We have invested in a new platform to make Picture Portal more user-friendly – this is being built now by TWC.
And Plan for Profit?
It is going well too. It is a fundamental part of what we do in retail. It grows every year. Latest audits show that our symbol stores (Today’s, Day-Today and Lifestyle) are running at 72% core range compliance and our depots at 94% compliance. As well as being about core range, we have our ‘Focus On’ guides where we look at incremental opportunities, whether in existing categories or emerging categories. The latest is on sharing confectionery.
We are looking at how the principles of Plan for Profit can be adopted for out of home. It is challenging in foodservice – developing a core range in foodservice is a lot harder than in retail. We would have to break it down by customer type. A core range for a fish & chip shop would be very different from a core range for a café.
How many members are taking advantage of the central services you offer?
We have 127 members and 1,600 outlets actively participating. Our central services offer is gaining good traction, and I think it will be a much bigger opportunity as we go forward because retailers and wholesalers are facing increasing costs. We have a new controller, Fergus Dodds, to bolster our drop shipment providers, and Steve Hodson looks after the services. We have obviously targeted the big areas of impact – waste disposal, EPoS, energy, etc – so we are looking at the tiers below that. There are still plenty of services to go after.
What are your plans regarding the development of your own-brands?
We still see a role for own-label but it is a relatively small role. Our focus is, and will continue to be, on brands but we recognise that there is a need for a value proposition to complement those brands. We have a relationship with Morrisons to make a limited range of the Safeway branded products available to our members – they are used where we have gaps in our range. We will be looking at foodservice own-brand as part of our review.
Are there plans to develop Today’s, Day-Today and Lifestyle in light of progress (new fascias and formats) elsewhere in the market place?
Our members are actively developing these brands and we will continue to support them in driving them. The retailer relationship is with the wholesaler, not our central office.
COVID did delay a lot of store developments. We have a good number of stores ready to join our symbol groups but they are being pushed back because we are still struggling to source some shelving and refrigeration.
Meanwhile, retailers who were buoyant through COVID are reinvesting in their stores, which is a good sign.
How are you finding your role as MD?
I am really enjoying it. The opportunity that I can see ahead and the strategic review I am undertaking mean it is an exciting time for Unitas. There are a lot of challenges coming out of COVID, but I am very optimistic. The group is in a good position going forward.
Unitas: fast facts
Performance (sales through wholesaler members): +9.7% including tobacco, +3.6% excluding tobacco (2020/21 versus 2019/20)
Wholesaler members: 159
Split of members: 46 retail, 58 standard, 7 specialist (turnover £4.95 billion between them); 31 foodservice (£2.5 billion), 17 licensed (£750,000).
Symbol stores: 762, up by about 50 on previous year. (Today’s 267, Day-Today 251, Lifestyle 244.)
Club stores (participating in Unitas promotions every three weeks): 3,628, up by about 180 on previous year. Unitas staff: 53