Adapting to change

How does the combined might of The Health Store and Tree of Life affect service to independents?

When The Health Store was acquired by the Health Made Easy Group (HME) back in 2018 it’s fair to say there was some apprehension not only from customers but, to a degree, from staff as well.

The sector’s oldest wholesaler to the independents being absorbed into a larger group that includes Tree of Life was always going to raise a few eyebrows.

“I think there was a genuine perception from some retailers that Tree of Life was more of a ‘corporate’ entity than THS and therefore that THS was going to somehow be gobbled up and absorbed without trace in spirit as well as in body,” says Paul Rideout, Group Commercial Controller for the Independents.

However, the reality is very different and the fact is that very little has changed in terms of the THS focus and ‘personality’, other than the ability to offer independents more benefits.

More in terms of things like overall service, breadth of range (ambient, chilled, ToL own brand, commodities etc.) and a knowledge of the market gained not only from the group’s overall trading history but also the significant experiences of the management and their teams within it.

This combined knowledge and experience of all in the group has helped to provide a greater view of the market’s landscape and the ability to be not only more adaptable but also more ‘nimble’ around reacting to things like demands and trends.

Looking forward, the independent retail sector will remain a core focus for the HME group and its two wholesalers, THS and Tree of Life, while everyone accepts that the online channel has become a shopping behemoth over the last couple of years, propelled at breakneck speed through 2020 by the new normal and the last few lockdowns.

“A few years ago, the independent retailer may have looked with some suspicion and even contempt at the online channel but everyone now accepts that it’s not going away and has become an essential shopping option for just about every consumer, everywhere,” says Paul.

“This is even more relevant when you consider that every day we hear of another of our retailers who have embraced this opportunity and set up their own internet shopping site for their local customers or those further afield.”

Therefore, whether THS deals direct with bricks and mortar stores or similarly with online sellers, there are now ‘hybrid’ type customers and therefore THS is directly or indirectly involved in the online channel supply chain.

In terms of the group structure, clearly whenever businesses merge things will need to change to accommodate new and existing processes on all sides and to enable an efficient and coherent intercommunication.

“I feel fortunate that my role as Group Commercial Controller continues along a similar path to that from before the merger in as much as it focuses purely on the independent retail channel, albeit as a group role it obviously now encompasses both The Health Store and Tree of Life customers,” adds Paul.

“My combined customer service and order processing teams across both sites have almost doubled in size accordingly, as have those of the other THS personnel who have been given group responsibility, Tim Ryan and Julian Wright.

“From my personal perspective, I feel the HME group is extremely lucky to have two of the best customer service teams in our market, guided by two excellent customer service managers in Rachel Bostock at ToL and Halina Mozdzen at THS.”

The supply chain

It was late February 2020 when the full impact of a possible pandemic was understood. That started people stocking up or even panic buying. This caused a number of big issues for the supply chains in both businesses.

“This meant getting stock in and working out how best to apportion what stock arrived,” says Supply Chain Director Tim Ryan. “In a way the first problem resolved itself, in that it was broadly out of our control, however the teams did use relationships to try to ensure that both sites got a fair share of available product. Given that some of the lines we stock are also listed in the multiples and online, brands were making decisions about how much they wanted to support the independent trade.

“This time last year, service level fell below 50%, and didn’t recover to almost pre-Covid levels until September. There are still some challenging areas, however these then merge into the issues caused by Brexit!”

Both businesses set about creating internal rules and processes to protect as much stock as possible for the independents. While clearly challenging, many of the accounts which were trying to buy up large quantities of stock were pretty easy to spot.

“We also tried hard to reward loyalty, not taking on lots of new accounts and carefully reviewing orders from customers that did not often purchase from either site, and in general I believe we did a reasonable and fair job under very difficult circumstances,” adds Tim.

The impact of Brexit is quite different between the two businesses. This is due mainly to historical choices about the route to market in Ireland. ToL chose to engage with the two main wholesalers in Ireland, whereas THS dealt directly with independent retailers.

Brexit had some teething troubles, as the politicians put it. Mainly that none of the systems needed to import goods outside of intra-EU trade were ready or fit for purpose. This has been much worse for customers of THS as many were not able to register for all of the new requirements as they only became clear when the trade deal was agreed on December 24. There are some exceptions and easements that are helping some supplies to get through but it is far from smooth.

The main outstanding area of frustration is organic. While the Soil Association is trying to do its best, it is extremely complicated and time consuming to complete the online process of clearing organic lines.

“This is made even more annoying by the lack of support from EU, the inability to upload data into their system, and the lack of empathy in dealing with large complex invoices created by both businesses,” says Tim.

As Tree of Life has two customers in Ireland, the invoices are bigger in monetary terms, but have similar numbers of entries. The Health Store has over 70 customers, therefore requiring 35 times more processing. This has meant that lead times for organic goods have increased dramatically for retailers, with many complaining about empty shelves.

Serving the independent

Both businesses have a focus on listing health and general wellbeing lines that will help to maintain an active market for consumers who choose products which they perceive to be better than mass market supermarket offerings.

“Over time, the channels the two sites have chosen to supply and the relative volumes between them have varied but the core belief is that both should offer great ranges of products to suit the retail channels,” says Head of Buying, Julian Wright .

There are some differences. Tree of Life has developed its own brand into more product areas than the simple dried fruits, nuts and seeds that THS offers, while THS has always offered chilled and frozen. One of the key reasons for this is that retailers, especially independents, like to deal with multiple suppliers and so ranging is often about capturing a small part of a retailer’s demand as their second, third or even fourth wholesaler.

Both businesses have always dealt with the independents in a very similar way, trying to have ranges of products that appeal and give the retailers a point of difference from their local and internet competition.

“This is best demonstrated by moving the management of all independent accounts into one team, allowing them to really push internally for the offering that independents want and need,” says Julian. “Range is generally seen as the key, however this is now being closely followed by services. Independents are rapidly evolving digitally and need much more support from their wholesalers.”

Who’s on the bridge?

At the very top as Vice Chairman is another THS player in John Gibson, with whom the THS part of the HME equation has worked for over eight years. John continues to steer from the ‘bridge’ of HME as captain of this rather larger vessel.

Tim Ryan, who most customers will know extremely well as MD of THS, now heads up the group supply chain which obviously encompasses all logistics and buying. Tim’s record for helping to steer THS through some very challenging periods over the years speaks for itself.

Julian Wright, who is arguably one of the most experienced and knowledgeable buyers in this industry, needs no introduction and heads up buying for the group.

Head of group commercial is Lisa Pool who joined Tree of Life a few years ago and brought with her a wealth of experience gained from some of the retail sector’s biggest businesses.

The group export channel, which includes Northern and Southern Ireland, is looked after by Mike Kilcourse who was previously with Tree of Life.

It’s a team within an organisation that serves the independent sector so well and shares a common interest and ambition that is focused on helping to future-proof the supply chain and the overall service to independents.

Read more articles from our latest issue...