The convenience industry was completely taken by surprise when the news broke that Booker Group and Tesco had struck a £3.7bn deal to merge.
We spoke to Charles Wilson, chief executive officer at Booker, to find out what it means for independent convenience stores served by the wholesaler.
Why did you make the deal?
“We see this as an opportunity to continue doing a better job. Generally, a lot of retailers are complaining that rates are going up, national living wage is going up and pension auto-enrolment is costing them money. They’re getting hit with a number of things at a time when business is pretty difficult.
“Our customer satisfaction has improved and sales to retailers have grown – we’ve grown in partnership with customers. We think by working with Tesco we’ll be able to go to the next level.”
What are the benefits to your independent retailers?
“Better choice – Tesco has got a very good range we can tap into that can help us make sure we’ve got exactly what we need for all our independent retailers. We’ve made good progress on service, but by combining delivery we can do an even better job of making sure trucks are spending their time delivering rather than driving around.
“More scale will give better prices and we can continue to strengthen promotions. And in we can continue to improve quality – particularly fruit & veg. It will also give them new opportunities, such as access to Tesco banking, mobile and PayQwiq services.”
Will it affect independent retailers’ ranging?
“I want to be absolutely clear it’s a merger not a takeover. We’re not a retailer; we’re a wholesaler. Tesco is the other way round; they’re a retailer. We’ll be keeping Booker as a wholesaler and keeping that expertise there, and keeping Tesco as a retailer.
“Farm Fresh brand is a good brand, but we know that by working with Tesco we can get an even fresher product at a better price. So we’ll keep it as Farm Fresh, but we can plug into that supply chain. The plan is we’ll keep the Tesco brand in Tesco stores and keep our own brands in our stores.”
Do you expect any retailers to leave Booker as a result of the merger?
“It’s a worry, but we’ve got to show how, by working with Tesco, we can help those retailers prosper. At Booker, we don’t hold our customers to big contracts. We know we’ve got to earn their business and you do that by doing a better job than anybody else. It’s entirely down to them, but I think once we’ve told them the story properly, they’ll say that Booker Group with Tesco is what I want to back my business.”
How involved will Tesco be in independent retail?
“Are we going to be turning Booker retailers into mini Tescos? Not a chance. We’ve got to give that reassurance, show them what the benefits are. These are independent retailers. They know what they want and what they need, it’s our job to earn their business and to serve them.”
How will One Stop fit in with Booker’s symbol groups?
“When we get closer to completion we’ll put out the organisation structure. We’ve got a fantastic opportunity. Premier, Londis, Budgens and Family Shopper is a symbol operation and One Stop is more of a franchise, therefore, you can offer a whole spectrum of solutions and tailor it to what the retailer really wants.”
How will you be communicating changes to retailers?
“I think we’ll be having a roadshow for Londis, Budgens, Premier and Family Shopper retailers to take them through the story, and why this is good for their business. We’ll keep in regular communication.
“The thing I’ve learnt about retail – it’s not about words, it’s what you do for them. We’ll continue to do a better job for them and that’s the way they’ll prosper.”
When do you expect the deal to go through?
“We hope it will be complete by the end of 2017, early 2018. We’ll see.”