Richard Thompson, director of Gilbert Thompson – a traditional yet forward-thinking fresh produce wholesaler that began trading in 1909 in Leeds, Yorkshire – guides us through the various disruptive factors that are affecting the wholesale trade in the UK and the prevailing trends outside of the major London marketplace. He also offers his thoughts on how wholesalers can best equip themselves to move forward during these uncertain times
“Disruption can be positive – for those businesses that are prepared,” notes Thompson, who together with his brother Daniel, runs Gilbert Thompson, as well as sitting on the board of the Fresh Produce Consortium
(FPC), the UK’s trade association for fruit, vegetables and flowers. “Our whole team is ambitious – we’re constantly pushing each other. We’re competitive in a good way.”
Thompson explains there are various disruptive forces currently affecting the UK wholesale trade.
Here are his main observations:
Globalisation – “There is rising competition for fresh produce from expanding foreign markets, especially demand for certain products at certain times of the year.”
Legislation – “New rules such as the National Living Wage, the landfill tax, compulsory employer pension and MRLs all bring ever increasing costs. But the price of produce is not going up. Wholesalers can only take more margin out of their products and they end up passing the cost down to the producers.”
Recession – “This has brought about retailer competition for traditional wholesale products, such as some Grade 2 products and smaller products.”
Relocation – “Driven by capital land values around major cities, market relocations are extremely disruptive for individual markets. Birmingham Wholesale Market is having to move and New Covent Garden Market is going through the process now. A number of tenants have different opinions on location and how to build new premises, yet they have to sign relatively long leases. Because of their age or financial standing some wholesalers can’t do it and many end up having to sell their business.”
Food safety – “It can be disastrous [for wholesalers]. The E Coli outbreak in 2011 was initially blamed on Spanish cucumbers which cost that industry £137m a week, and then German bean sprouts turned out to be the cause. The problem for wholesalers is that consumers moved away from salads rapidly. Then, it takes time to encourage them back because they’ve already moved onto other products they feel safer with.”
Not all bad news
Nonetheless, Thompson believes UK wholesalers, including those at a local level outside of the major London markets, have a significant and positive role to play in the produce trade, provided they are open to change and remain progressive. “[Wholesale] It’s a strong, professional sector,” he points out. “We deal in quality produce, and we can achieve premium prices for the best products.”
Indeed, Thompson is confident the UK wholesale market sector is still full of potential; explaining in another Produce Business UK article published late last year, that he sees growth for both his business and for the fresh produce businesses evolving around him.
“I think if you look around, the businesses that are moving forward are those that are showing the desire to reinvest money back into their business,” he comments. “Despite the consolidation that’s taken place, or perhaps because of it, the businesses that are left in wholesale are stronger and often well-placed to invest. That's the way wholesale is going, I think. Even though existing markets might continue to shrink a bit, you’ll still be left with decent-sized, well-capitalised companies that are investing for the future.”
One key approach that has worked for Gilbert Thompson is diversification. The group began to expand in Leeds around 2010, when it supplemented its produce and flower businesses in the market with GT Prep, which prepares a range of vegetables for customers. It then opened a flowers and plants business in Sheffield in 2011, another Yorkshire city around 35 miles from Leeds, which operates under the same GT Flowers banner as the Leeds firm. In July 2015 the group went one step further, by buying Sharrocks, a wholesale fruit and veg business in Preston, Lancashire.
“A number of companies operate in their own areas,” Thompson says. “Quite a few aren’t ambitious; they’re not pushing the boundaries and looking to go into new areas. Meanwhile, there are some who are trying to go direct and get containers [of produce] themselves as everyone is trying to achieve that field to fork [supply]. The progressive wholesalers are looking at how can they buy direct from farmers and deliver straight to customers. They could be stepping on toes of importers. Having bought Sharrocks, we might try to do that too.”
Gilbert Thompson has also dared to do things differently. As recruitment problems within the wholesale sector rumble on, the business is considering a new approach to encourage staff to join its team.
“As we get bigger and try to become more professional it will be necessary to attract talent,” he says. “One thing we’re really having to look at it working hours. We start at 1am in the morning, six days a week. It’s extremely hard to advertise for a job like that and to get people to apply. We’re going to have to look at staffing over five days a week but our customers come six days a week. But still, the wholesale market is a really exciting place to work. Those that enter the business tend not to leave. For all the long hours and hard work it’s a fun, vibrant place to work.”
Protecting against disruption When it comes to dealing with disruptive forces, here are Thompson’s top tips for wholesalers:
Plan – “Always look ahead.”
Get involved in the wider trade – “Knowledge is power; get out and meet your peers. Find out what others are doing in the UK and around the world to get ideas. That’s part of the reason why I joined the FPC and go to shows like the London Produce Show. There were people there from Europe, China and India.”
Diversify – “This has been extremely beneficial for us. Move into different products, areas and customers. We have added flowers, sundries and online.”
Be well resourced – “You’ll be able to ride out the disruption. No matter on what level we’ve found that because of the way we've funded the company we can keep money in the business and take opportunities that we might not have been able to otherwise. There are a number of wholesalers who might be very profitable but their rates might be high, which is not great for moving forward.” Join trade associations –
“The FPC does amazing work; it represents the industry at a European level. It has an extremely good knowledge of the trade, and a whole host of issues would become extremely dangerous for the trade if FPC did not represent them.”
There are also a number of key prevailing trends, which UK wholesalers can use to their advantage, according to Thompson.
Here are his key points to consider:
Increased and more diverse foodservice options – “In Leeds new restaurants open every week, with cuisines like Turkish and Iraqi. Also, everywhere you go has to have a café, whether that’s in the parks, leisure centre or shopping centre. Eating out has continued to increase.”
Changing product ranges – “From iceberg lettuce and whole round tomatoes, the market has moved to convenience. Cherry tomatoes in punnets, potted herbs, micro herbs etc. If you go to the London markets or Birmingham there will still be some products you don’t recognise on sale.”
Reduced market share of value products – “There has been a big change around the country. Wholesalers traditionally received the bulk of products, while retailers rejected too small fruit or single bananas. Wholesale had that sector to themselves. But with the recession and retailers offering economy brands, they have started hoovering up those products and taken availability away from wholesalers. I don’t think that's going to change, although the value ranges are going to change. It has hit wholesale hard as previously we could compete with retailers in those products. Independent retailers are finding it particularly hard.”
Farm shops and provenance – “This is vastly on the increase and it’s positive news for wholesalers. Farm shops have really tapped into the requirement for provenance – consumers want to know where products have been grown and how. They are an alternative to the big supermarkets, they’re rural, they often have playgrounds for kids, cafés, petting areas with animals. It appeals to consumers not to go to the big brand names. One of our customers has just spent £2m on a new farm shop. He hoped he would do half of what his existing farm shop did and it’s already done 50% more. I couldn’t even get into his shop one day. Of course, it’s premium product and it’s not cheap. But they offer a range of dry products that are different brands to the supermarkets. They are differentiating themselves and it’s working.”
Increased demand for certification – “This is a new factor. Wholesalers are facing more and more demands for full product specifications and product recall procedures. It’s an area traditional wholesalers have struggled to contend with. If they don’t have the IT knowledge to facilitate it, they can be cut off from a whole segment of the trade such as hospitals or Local Education Authorities. Whereas some wholesalers have bitten the bullet and gone outside of their traditional market and done well.”
Gilbert Thompson through the years
1909: Business began with horse and cart.
1932: First wholesale business was opened.
1967: Moved to purpose built site just outside of Leeds.
1999: Bought own premises and rented space to other wholesalers.
2010: Gilbert Thompson Prep launched to specialise in prepared produce.
2012: Group wins wholesaler of the year award from the Fresh Produce Consortium.
2015: Group buys family wholesaler Sharrocks, and installs two new IT systems.
2016: Plans to launch new flowers business within Sharrocks, with more products going online (produce), and moving to 24 hours trading for convenience and better access.
The Gilbert Thompson group
Today, the group comprises five subsidiaries: Gilbert Thompson Produce, Gilbert Thompson Flowers, Gilbert Thompson Prep, Gilbert Thompson Sundries and Sharrocks Fresh Produce. Based in Leeds, the company serves 2 million people within a 35-minute radius of Leeds, and 5 million across Yorkshire, in addition to Sharrocks’ customer base in Lancashire.
Gilbert Thompson Produce
- Very traditional fresh produce wholesaler.
- Approximately 50% of its business is foodservice-led – serving catering companies and independents.
- The other 50% is focused on retailers, farm shops, summer markets and 200+ schools for Local Education Authorities.
Gilbert Thompson Prep
- Started in prepared produce – a growing sector – in 2010.
- Business now starting to take off.
- Serves mainly schools, hospitals and nursing homes.
- Fourth-generation family wholesaler purchased in July 2015.
- Very similar product range and customer base in another area, Lancashire.
- Gilbert Thompson had been looking how to take its business to the next level but didn’t see opportunity to sell more in Leeds.
- In buying Sharrocks, the Gilbert Thompson group will raise turnover from £10m to a combined £20m business.
- The acquisition will put the group in a much stronger position as it moves towards more efficient purchasing over the next five to 10 years.