News Industry Profile Alf



Industry Profile: ALF
9th April 2014

By Sandra Pearce

Wholesaler ALF is standing firmly behind the independent retailer and introducing initiatives to help grow footfall. Sandra Pearce talks to Kevin Barton to learn more

Large chain stores are so utterly bland as each unit tends to follow the same format, observes Kevin Barton, owner of wholesaler ALF Ltd. Independents, however, can tailor their product offering to their catchment, making them so much more dynamic and interesting, and from a customer’s perspective, it’s nice to have this point of difference.

Kevin describes himself as passionate – whether it’s for his boys’ skiing achievements, his business, or the success of his retailer customers. It quickly becomes evident this passion for the independent has translated directly into action, demonstrated by ALF taking the decision to support the independent trade and take action against the unauthorised distribution of its brands online (reported in January’s issue of pbwnews).

“My ethos is that the Internet started off as a baby that was ignored. Then it grew into a problem child, and is now a juvenile delinquent,” he says. “Don’t get me wrong, the Internet is a good tool, but it has to be used in conjunction with a shop. Look at John Lewis and Next and how well they use both.”

The aquatics industry needs to have a strong bricks-and-mortar presence, he says, because the vast majority of fish sales are through pet and aquatics shops. These shops provide a route to the hobby for beginners and experienced fishkeepers, and if they close because people are buying their accessories, food and treatments online, then the aquatics industry is as good as dead.

Thinking ahead
Aquatics is ALF’s speciality, though it also has a limited range of cat and dog products. It operates from a 58,000sq ft warehouse in Bedford (but with mezzanine floor has a total 92,000 sq ft) using a state-of-the-art, bespoke, fully integrated warehouse management system, developed over a number of years with a UK software company. Anyone can buy an off-the-shelf system, he adds, but one product does not suit all. He believes software has to work for you, and not you adjusting the way you work to suit the software. “I wanted to be able to control it and our basis from where we build on.”

The investment has paid off as the system enables workers to deliver high performance and efficiencies – theoretically, a customer could place an order at 5pm and have it delivered the next day at 8am. Well, apart from Scotland or Cornwall. The company is proud of its next-day delivery promise, a strong selling point. Its own fleet of trucks and vans run 20 routes each day, servicing about 1,200 retailers on a live customer base.

The software monitors all products, seeking out those with shortest sell-by dates, processing a plethora of information including how long an individual product has been sat on the shelf for. Stock arrives constantly from all over the world – when full, ALF sits on an estimated £7.5 million worth at retail value. Not that it sits around for long. Yet despite such frenetic volumes, it’s strangely quiet.
“Everyone comments on this,” he says, but it’s due to the highly efficient picking and packing systems.

Tight structure and sound management are the strategic cornerstones for ALF, put in place by Kevin who graduated with an honours degree in mechanical engineering, and then moved into chartered accountancy, where after a while he decided that he’d had enough of analysing other people’s businesses and would like to buy his own. As an accountant, he’d seen numerous companies grow, then hit a plateau. Companies that kept growing, however, exhibited good structure and management hierarchy and practices.

He eventually found a small company based in Hitchin, Hertfordshire, that supplied live food to aquatics retailers, and which ticked all the criteria. He and his dad (who wanted semi-retirement) bought the business in 1988, and he smiles somewhat wryly as he recalls the ‘complete shock to the system’. The world of accountancy is a tad different from wholesaling live foods! That and the fact that some suppliers did their best to take advantage of the new kid on the block. “You learn quickly who your friends are.”

In that first year, turnover was in the region of £120,000, and he thinks he probably spent that on IT infrastructure, much to the amusement of some. But if you’re going to do something, you need to take a long-term view and plan accordingly, he says. Today, annual turnover is just under £13 million, and ALF employs 68 staff, not counting the fleet drivers and seasonal staff.

Such long-term planning and preparing for all contingencies includes having an on-site generator in the event of a power failure, ensuring ALF and its online ordering website for its customers is always functional.

Being an engineer and an accountant means he can assess a new product on both its build and financial basis. The engineer side of him kicks in with his insistence that every product they take on is tested to destruction before distribution, an expensive process that can take months, if not years. It means that when a new product is launched, it not only has been tested in-house, but also screened by an approved Trading Standards testing house.. “As an engineer, it’s all about making things fail-safe,” he says.

ALF’s attention to product safety and reliability means that products are tested from every container, even if it means taking a product apart. Whole shipments have been rejected in the past. With China-made aquariums, for instance, they were not able to get the consistency in quality and so the decision was made to bring production back to Europe. “At the end of the day, we as a main player in the industry have a moral obligation to the consumer that we will sell to the retailer products that will do the job correctly and safely.” Morals that all too often go out the window when you sell purely on price point, he says.

Having been in the industry for a quarter of a century, ALF has built up a global reputation such that suppliers are always approaching them with new products to bring to market. However, Kevin also attends all the main trade shows, including America’s Global, Germany’s Interzoo and China’s CIPS. ALF even has export customers, each having approached ALF independently. “The Internet has made the world a much smaller place,” he observes.

ALF works as closely as possible with manufacturers, discussing issues including product placement and packaging. “We are the main conduit to market for a number of manufacturers, so we really have to get a handle on the stock.”

Support for the independent
Kevin is keen to emphasise that ALF’s turnover is based solely on sales that are direct to trade resellers. “We have only one route to market, which is through independent retailers,” he says. ALF does not sell direct to consumers, which helps explain why he is so passionate about the independents’ success.

He notes how in previous recessions, the pet and aquatics industries tended to be largely recession-proof. But this had the effect of attracting larger players into the market, including pet and aquatics chain stores, the grocery channel, internet retailers and the latest, Poundstretcher with its Pet Hut. All of these pressures dilute the market, putting the independent under a lot of pressure. Plus, these large companies have financial resources at their disposal, which enable them to expand at almost dizzying speeds.

This latest recession has, however, been different from others in that whereas in the past when aquatics stores closed down new ones would open, this time, far fewer new independents have sprung up. “And why should they when business rates are so expensive and the high street is devoid of retailers? When they can sit at home, sell a few things off the Internet and perhaps work a few hours in a store instead, with effectively no responsibility? There is no incentive to open a shop, where you also have to worry about employment laws, health and safety, the Sale of Goods Act and a whole lot of other issues.”

ALF has, however, a definitive plan and strategy to help the independent keep growing. “Most independents are brilliant in fish, they love the hobby, they are passionate about that,” says Kevin. Yet their talents and skills do not necessarily extend to all ‘back-room’ areas such as stock control, HR, management, accountancy or any of the myriad business practices that retailers have to be extremely familiar with so as to grow their business and ensure it remains in a strong, viable position.”

Over the past few months, ALF has been working with a handful of retailers, trialling a new scheme to help with these ‘weak spots’. “We are getting really, really close to retailers,” says Kevin. “We are trying to assist them to be more proficient so they can be more profitable and compete with the chains. It’s all about partnership. Our aim is to bring them into the 21st century, to support the independent and encourage more shops to open.”

Such help can range from supplying an electronic EPoS system, help with accounts or HR to even providing stock. “Our preference is these partner shops may have company websites, but do not offer national Internet sales. Click and collect is the way forward, encouraging footfall instore. And all shops involved must sell fish, because if you drive sales of fish forward, everything else follows on,” explains Kevin. “This partnership is cutting-edge stuff,” he says.

So how much will retailers have to pay for this service? For the first time in this interview, Kevin does not have a black-and-white answer. “It’s about developing partnerships and about getting closer; if a retailer gives us huge support, we will give that back. It’s all about enabling you to compete with larger national chains and grow the independent market.”

He has further ideas for independents. One of them involves display tanks: “When I buy a car, I do not go to see a pile of tyres and a pile of seats, and then imagine it all together. Likewise, an aquatics shop should have lots of display tanks so customers can come in, have a look and be inspired. It’s what drives sales.”

He is also keen on independents stocking products based on customer demand and geographical variations. Big chains tend to be bland, clinical, with a much of a muchness. He would like to help his partners experiment with their stock profile – without risk. “Each geographical area is different, and sometimes what sells well in one area will not sell as well somewhere else. We want to help the independent try different products, and will help our partners assess what could work for them. If it does not sell, we will take these products back, at no cost to the retailer.”

It’s about staying two steps ahead, even though sometimes that road is a hard one. Yet when things work, it’s a case of ‘today’s devil being tomorrow’s god’. He says: “In the end, when people see the results, they accept the new way. It takes hard work and perspiration to get to the top, but it takes honesty and integrity to stay there.”