The announcement that Tesco is to complete a £3.7 billion deal to buy Booker Group, the UK’s biggest food wholesaler, presents both a challenge and an opportunity to FMCG suppliers hoping to benefit themselves from the consolidated organisation, according to category and shopper marketing specialist Bridgethorne.
In addition to Tesco’s extensive reach, Booker supplies 5,500 stores around the country that are badged with its own brands like Budgens and Londis as well as giving Tesco access to a network of up to 8000 neighbourhood click and collect points around the country.
Andrew Cole, Joint Managing Director, category & shopper management specialist, Bridgethorne:
“This is the coming together of two very smart businesses and in Charles Wilson from Booker, Tesco has access to one of the most respected and admired figures in the industry. Suppliers, though, don’t have the luxury of sitting back and waiting to see how this pans out. They need to be developing their growth plans now for the implications of these two businesses coming together. The likelihood is that it will make Tesco even stronger in small store and convenience stories. It’s important to understand the implications of this for your business and how you can benefit from it.”
Cole says it’s clear that an important emphasis is going to be placed on fresh and own label, and similarly e-commerce:
“FMCG suppliers should start asking themselves what reason their products are going to have to be stocked across all available channels, from big stores and convenience to wholesale and online. If they are into own label, they need to identify a new own label strategy and if you’re in fresh, where sometimes suppliers can be less category or shopper centric, now is the time to get yourself so.”
Cole adds that there will inevitably be winners and losers and those suppliers who want to be among the winners need to start planning their strategies now.
“We would say don’t simply try and defend your existing position, but embrace the opportunity and go on the front foot in trying to demonstrate how you can help the new combined business grow as well as your own.”