Case Studies

Business Transformation in Australian Convenience Wholesale

We were engaged by one of Australia’s largest convenience and foodservice wholesalers to review and understand the drivers of historical under-performance and determine the most effective strategy to either divest or turnaround the business.

Following detailed review we designed and led the implementation of a transformation programme based on initially addressing the sales decline and reducing costs, merging 2 parts of the group and then implementing a new Target Operating Model which established the platform for cost effective growth.

Challenge

Our client was one of Australia’s largest wholesalers serving the independent retail community across grocery, general merchandise, liquor and home improvement sectors. The Convenience part of the group comprised two business units who between them served independent convenience retailers and petrol and convenience stores across Australia.

The first wholesale business had been in existence since the 1930’s serving small independent retailers with their convenience and foodservice needs. The business had been in decline for some time and as a stand-alone entity was unlikely to survive in its current form. The second business operated as a stockless warehouse via group distribution centers and whilst on paper was profitable it was reliant on the first wholesale business and the wider group to hold stock and provide fulfillment capability.

Our review identified that the two businesses were serving similar and in some cases the same customers with different operating models and a confused market proposition. It was also apparent that there was no clearly defined role for either business within the wider portfolio. The existing strategy based on Foodservice as a core driver of business was also unlikely to be successful due to the competitiveness of this market and embedded competition and the lack of capability to provide the full Foodservice range.

Approach

Working with the new Managing Director, we completed a detailed review of the businesses to understand the reasons for the historical under-performance from both trading and cost perspectives. We also assessed the customer and market requirements to identify where the business could most effectively position itself and compete. It was also important to define the role within the group and we worked with the Board and Senior Leadership teams across the group to establish the role of convenience in supporting the group vision.

Based on the assessment combined with some trials to test our hypothesis we implemented the following:

  • Stabilised Trading & Cost Structure – Merged the two wholesale businesses into a single business and redesiged the organization structure. This created a ‘Palatable Hold’ to achieve a break-even EBIT, deliver cash to the Group and avoind the high cost of closure. The Palatable Hold also bought time to understand the future growth opportunities.
  • Defined a new strategy for the merged business – based on a new customer value proposition the strategy refocused the business on three areas, growing share of the Petrol and Convenience sector where they were already market leader, growing share of the independent convenience market where they were the primary wholesaler behind the parent group, and developing Foodservice capability where it supported these sectors.
  • Defined a clear role within the Group – this established the role of Convenience as the top-up shop of choice for client-supported retailers, the Foodservice supplier of choice for the group, supporting the wider growth plans, and becoming an operational network partner providing cost effective extended geographic reach.
  • Designed the Transformation Programme – setting out how the strategy would be executed through the implementation of a coherent set of initiatives based on a single, integrated Target Operating Model

Outcome

On completion of the engagement we had stabilised the performance and cost structure of the business, established a clear strategy and role within the group and designed a transformation programme that set out the roadmap to execute the strategy. We also developed the supporting detailed programme plan and established the structure and process by which the business would govern and manage the implementation.

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