There’s a lot of balance sheets in the retail grocery sector that can’t take much more disruption, according to Booker chief executive Charles Wilson.
Speaking at the 2014 IGD Convention, Wilson said the supermarkets’ economic model has been disrupted. Their market share is down by -3%, they are no longer positive cash generators and their debt levels have increased, he said.
In this scenario, suppliers will need to go where the growth is, Wilson claimed.
Disruption has come from convenience stores and discounters, he told delegates; and he advised them to look at the discount stores’ Christmas ranges.
“They look set to have a very good Christmas and, if they do, it will carry them through for the rest of next year,” he claimed.
Booker is expanding its own discount format, Family Shopper, with plans to expand the current 15-store chain to 400 stores over the next four years.
Wilson highlighted other new market entrants such as farm shops and the nutrition products retailers, Nutri Chef and Diet Chef.
Suppliers, such as Nespresso, are also beginning to go direct, he said.
Technology is also playing a role. In India, for example, Booker’s biggest customer is an online retailer.
Wilson presented Booker’s earlier disruptive episode and revealed his leadership style: to focus on cash, customer satisfaction and a broader offer.
Since 2008, Booker has grown like-for-like sales by £1bn, he reported.
“It’s fun managing businesses in these disruptive times,” he said. “If it’s easy, it’s boring.”