Big retail thinks global, acts local

02 May, 2008
The different UK multiples take varied approaches to local product sourcing. Paul Gander looks at a few examples and finds retailers now encourage direct contact from smaller suppliers with something special to offer
Page 26 
I f the major multiples are to be believed, their attitudes to local sourcing have shifted dramatically over recent years. Gone is the emphasis on size and scale. Gone are the uncomfortable trade-offs between volume and margin. Or so we are told.
Certainly, supply of branded products which are distinctive and locally-produced, sometimes to only a handful of stores, is increasingly being encouraged. As Sam Nundy, senior buyer at Tesco's East of England regional office, puts it: "We've looked at the Tesco business model and done the complete opposite. Some of our suppliers' products go to as few as five stores."So why turn all these hard-won economies of scale on their head? Most retailers will claim this is what consumers want. "You can ask 10 different people why they buy local products, and you'll get 10 different answers," Nundy suggests. Among these reasons, support for the local economy is likely to figure prominently. Road miles and carbon footprint will score highly among the environmentally-aware. There may also be an assumption that the food is fresher or uses fewer preservatives. Overall, concerns over food safety, quality and provenance will probably be on most consumers' shopping lists.With retailers more often being accused of stifling the local economy, visibly doing the opposite plays well with consumers. They can tap into loyalties and enthusiasms not only among shoppers, but also among this new seam of suppliers, many of them run by families and owners with a hands-on passion for their products.Stuart Easton, director of Riverbank Bakery in King's Lynn, Norfolk, has been supplying local Tesco stores since January this year. He is pleased that the range supplied now stands at nine different cakes. As he points out, the fact that the regional buyers are from the area and are approachable makes a great difference. According to Nundy, the bakery is currently supplying some 30 stores in and around Norfolk.But not all suppliers are so star-struck by Tesco's attentions. Some suggest that the retailer's 'softly, softly' approach at the outset gradually gives way to a more aggressive attitude to margins, as it pursues its targets. There is a contrast here with Asda, for instance, which is more willing to compromise on margins in order to stock more local products, a handful of suppliers report.Predictably, the various retailers also have different requirements when it comes to ordering and delivery. Riverbank, for instance, supplies through Tesco's own distribution network. Waitrose, which has forged a strong link between local sourcing and quality in its consumer advertising, emphasises a more direct relationship between suppliers and local branches.However, there is a degree of centralisation in every retailer's local-sourcing strategy. One supplier in a position to draw comparisons is Sussex-based Battle Bakehouse, which now supplies Tesco, Asda, Waitrose and Budgens with locally-branded biscuits. It also has a national contract to supply Sainsbury's with cakes through 120 stores, recently doubled from 60.Owner Kate Kent says she delivers biscuits directly to eight Waitrose stores, but contact is with national buyers. With Tesco, delivery is to the regional distribution centre (RDC), and contact is with the south-east regional buyer. With Asda and Budgens, supply is via a third-party distributor, but Kent says that the lack of direct contact with retail buyers is a major hindrance to progress here.AW Curtis in Lincoln is among two or three bakers that supply Asda's regional hub - in its case for distribution to stores around Lincolnshire and Humberside. According to director Neil Curtis, the twice-weekly deliveries span over 10 different products, from local delicacy plum bread to boxed pastries, fruit pies and pork pies. Curtis also supplies Asda with cured and cooked meats.The company is a retailer as well as a wholesaler, with several local shops of its own. But Curtis says: "We are already well-known in the area, and people come to us as well as Asda. The supermarket's longer opening hours and narrower range mean that we complement rather than compete with each other."Most retailers now encourage direct contact from smaller, local suppliers with something special to offer. Increasingly, this can be through dedicated pages on their websites, but in many cases, regional food groups and the events they organise have provided a forum for exploring new business relationships.Even Marks & Spencer (M&S), with its uniform image and branding, claims to be going local, although in most cases the products are identified as national (as in Welsh or Irish) rather than local or even regional. Gail Richards, category manager for bakery at M&S, says: "We are more likely to work with a small supplier if we believe there is potential to develop more products or ranges in the future."== Cunning ploy? ==Eight companies, including Organic Patisserie, Battle Bakehouse and Higgidy Pies - whose sales have doubled since their contract with Sainsbury's began in February 2007 - first met and presented their wares to category buyers and product developers at regional Supply Something New events. This supplier scout scheme was developed in conjunction with Food from Britain, the food promotion body that is now being wound up by DEFRA. Together, the eight firms totted up £1 million worth of sales within just six months for the retailer. Consumer groups with a sustainability focus suggest this is all nothing more than a cunning ploy on the part of retailers to find new sources of national supply.Some object that these initiatives are, in any case, not about substantial local supply but selective regional sourcing. But for a go-getting company with a premium product to sell, it is the regional perspective of the new breed of buyers that can be a limitation, while retailer flexibility to take products nationally can be a definite advantage. So of Sainsbury's Supply Something New initiative, Kent at Battle Bakehouse says: "The opportunity to branch out nationally, as we have done with our cakes, will be based on sales. But with Sainsbury's, we've been able to do something we never thought we'd be able to achieve." Conversely, as she explains, the fact that her cakes are "quite expensive" means they are not appropriate for every store within her local catchment area.So where does this leave genuine local sourcing? "I hope it lasts," says Kent. "But I doubt whether the supermarkets will invest in it long-term. And in a changing economic climate, where will people's priorities lie?"----=== Accreditation: jumping through hoops and doing the SALSA ===When it comes to the standards required by most national retailers and those achieved by many smaller local suppliers, there is often a mismatch not found with the majority of larger food manufacturers.While the latter may comply with British Retail Consortium (BRC) Global Standard, smaller producers are unlikely to have taken this step. And in fact, while the larger retailers welcome this standard, most do not expect it.Last year, the Safe and Local Supplier Approval (SALSA) scheme was set up, principally to fill this gap. Co-ordinator Keris Marsden explains: "The BRC Global Standard is relatively expensive and quite bureaucratic for a small, local business." Importantly, SALSA is recognised by foodservice companies, as well as the majority of retailers, and provides mentoring as well as certification.Tracey Telford, local and regional buyer at Waitrose, says: "We are strong supporters of the SALSA scheme. It's really good news if a particular supplier has achieved that standard. We also look at other evidence of best practice, from trading standards to environmental health."Tesco is the one major exception when it comes to retailer recognition of the SALSA scheme. It carries out its own audits, but does not charge for them.One supplier says: "Tesco's technical standards are higher, so they've made it quite difficult for themselves when it comes to bringing in new suppliers."Neil Curtis, director of AW Curtis in Lincoln, says: "We are slightly bigger than a craft bakery, so we were already at BRC level. Tesco did its own audit, and we looked at the processes involved in meeting their technical standards. It's still an option, but we've left it for now."[http://www.salsafood.co.uk]



Site Search

Webinars 

    Insights from the Bakery Market Report 2016

    You can now purchase the Bakery Market Report 2016, which offers insight into the retail bakery trade in the UK.

Events Calendar

Facebook

Twitter