Somerfield’s replenishment and supply chain systems will be established across the Co-op Group during the second half of this year, while own-label ranges will be rationalised by October as the integration gathers pace.
Speaking to Food Manufacture 10 months after the supermarket’s acquisition of Somerfield, a Co-op Group spokeswoman said: “Somerfield’s central replenishment model and system of GSM (global supply management) is being adopted by the enlarged business and is due to be fully operational during the second half of 2010.
“Co-operative brand products are being phased into Somerfield and are due for completion by October.”
While all commercial relationships with suppliers are now being handled by the Co-operative Retail Trading Group (CRTG), the Somerfield head office in Bristol “still has a number of support functions operating” and will remain open until the fourth quarter of 2010, added a spokeswoman. She declined to comment on reports that some staff at the Co-operative headquarters in Manchester had had to reapply for their jobs so that Somerfield executives from Bristol could also be considered for the roles.
The integration of the supply chain across the two businesses was progressing well, she added: “There is a logistics plan in place that will involve the construction of new composite regional distribution centres and the rationalisation of sites that are inappropriate for the size of the enlarged food business.”
While the Co-op Group is closing distribution centres in Talke and Eccleshall this year, with activities transferring to a depot in St Helens, it is also developing two new regional distribution centres in Andover (Hampshire) and Newhouse (North Lanarkshire).
With 200 Somerfield stores on schedule to be rebranded by the spring and much of the range rationalisation complete, the Co-op had made significant progress on the integration, said one supplier: “In chilled we’ve moved entirely to the Co-op distribution method, but we’re still using the Somerfield ordering system. Ultimately, they want a rejuvenated Somerfield system to use across the combined group, but until they migrate completely, it’s going to be a bit of a mixed bag for suppliers.”
Negotiations with own-label suppliers keen to supply the enlarged business have been handled on a category-by-category basis, with ‘hero’ and ‘everyday’ categories including fresh and dairy prioritised, he said: “When it comes to negotiating prices, if the question is: ‘Has this cost us money?’, the answer is ‘Yes.’ But generally, I think they [the Co-op Group] have been pretty fair.”
The profile of buyers at the CRTG was also beginning to change, he added: “You are beginning to see a lot more ex-major multiple buyers appearing at the CRTG, which has raised the bar. They know they have to step up a gear following this acquisition.”