What advantages does NORDWEST offer to retail partners?

What advantages does NORDWEST offer to retail partners?

Changes to the structure of the wholesale sector are inevitable. Concentration will increase, i.e. large companies will increasingly swallow up smaller ones that are no longer economically viable on their own. Thorsten Stiefken, Head of Business Development & Acquisition at NORDWEST, addresses the question of which strategy for the future retailers should adopt to counter this.

Thorsten Stiefken: I think being part of NORDWEST is much more important today than it was over 100 years ago. When we were founded as a trade association, our focus was clearly on purchasing benefits. Today, completely different issues are at stake, and, especially for local retailers, it is difficult to meet all the requirements of the markets – e. g. in the steel, construction and industry sectors.

Each of our partner wholesalers is faced with the same question: make or buy? Do I build the necessary structures myself or do I look for someone who can? As a result, more and more companies are reaching the limits of what is feasible. Then, of course, we at NORDWEST are the right partner for mastering the challenges in goods procurement, logistics, digitalisation and training, to name just a few areas. The simple fact is that local dealers are forced to concentrate on what pays off in terms of sales and service. Anything that doesn't involve sales and service goes beyond the scope of a medium-sized specialist retailer today. All successful market players are basically showing the way in this regard. Cross-divisional functions are being increasingly centralised, while sales and service are being localised. And this is exactly what today's specialist retailers need to internalise. They can no longer do everything and shouldn't have to. Our biggest stumbling block here are members of the founding generation, who say: “I did everything on my own”. And sometimes they ride off into the sunset and don't see the cliff waiting for them down the road.

Question: How does NORDWEST support specialist retail partners? Let's take a look at the value chain.

Thorsten Stiefken: NORDWEST offers a dual system: on the one hand, there is wholesale, where we ourselves sell the goods, and on the other hand, there is procurement from industry. As a rule, the larger the sizes, the more likely I am to source directly from industry. The smaller the sizes and the more of a mixed shopping basket I have, the better off I am with NORDWEST's central warehouse. Regarding the first point, we support all direct procurement needs with classic centralised settlement. The main advantage of central processing can be explained using a simple comparison: we go shopping in the city and think about what we want, choose the products, and negotiate the price. We present our credit card and get the goods along with a receipt. And after four weeks, we receive the bill, and then the money is due. Centralised settlement works in much the same way as a credit card. In this business model, a certain amount of the goods used by our retail partners goes through the NORDWEST contract suppliers and, to put it simply, we settle the accounts.

Question: Let's talk about logistics and the NORDWEST central warehouse. What does the service portfolio include in this area?

Thorsten Stiefken: Our retail partners decide where the order goes depending on their shopping basket. And then they also decide whether the goods should actually go to their own location or to their end customer. And today, well over 80% to 85% of all the shipments go more or less directly to the end customer.

The main focus here is on reducing process costs. As a retailer, I have to think about what process costs I have from ordering the goods to their arrival at the customer's or my premises. It may well be that a specialist retailer who purchases large volumes receives a lower price from industrial suppliers than from our central warehouse. However, if I think the process through to the end, I can generally be assured of spending less en route from the central warehouse to the construction site if I use the NORDWEST central warehouse.

Question: To come back to the logistics of the future… NORDWEST is planning big things with a new central warehouse.

Thorsten Stiefken: After moving our central warehouse from Hagen to Giessen in 2005, which was certainly a milestone for us at the time, the next milestone for NORDWEST is just around the corner. We will have completed our new building in Alsfeld, Germany, in the next year or two. Our aim is to expand Europe's best logistics service for industrial business-to-business trade with the new site in Alsfeld. This has already allowed us to give retailers even more support along the process chain and to offer other services, such as storing goods for retailers.

Question: Once your retail partners make a purchase, and the goods are in the store, they have to sell them again. How does NORDWEST support sales?

Thorsten Stiefken: We are aiming for omni-channel status for our specialist retail partners. This means that the specialist retailer should cover all channels – online and offline. In the field of stationary retail, NORDWEST provides support by supplying the sales force with the price lists, catalogues and advertising flyers that they need on the field. This is further consolidated in the form of training measures in giving professional customer advice. We take care of everything from the construction of new stores, store planning and product range selection all the way to lighting, music and digital touchpoints.

Question: How can specialist wholesalers set themselves up for the future? The focus of NORDWEST is therefore on digitalisation, as non-digitalised retailers will no longer have a chance on the market in the future. What is the best way for a specialist retailer to position itself?

Thorsten Stiefken: The question is how do I connect with my customers digitally? Because whoever connects with customers digitally will be the main supplier of the future. And vice versa: anyone who does not connect with the customer digitally will fall by the wayside. Specialised wholesalers need to understand that all of these sales channels need to be interlinked. This means that what happens on one channel must necessarily happen on the other. A striking example: a tradesman comes into the store, stands in front of the counter, has some time to wait, during which time he sees a brochure, takes the brochure with him and then, a few days later, he wants to order the item from the specialist retailer and goes to the online store. If this promotional item is not listed in the store, what happens next? He googles it and ends up at a large online department store and orders it there. And this is a practical example of the fact that our specialist trade partners are not yet 100% successful in dovetailing online and offline. If he had offered the product in his online shop, the customer would have bought it.

In an ideal scenario, end customers – in this case, industry or tradespeople – usually order digitally from our trade partner. “Digitally” means that it comes via an online shop, marketplace, and interface, after which the order ultimately ends up in our retailer's merchandise management system. This merchandise management system then sorts such orders. Some items go into the retailer’s own warehouse, some items are stored in the NORDWEST warehouse, and some items have to be reordered from the supplier. We now have the capacity to digitally link this specialist wholesaler to NORDWEST in such a way that it receives both the NORDWEST stock items and items from selected suppliers within a single order.

NORDWEST's digitalisation package includes over one million product data, its own eSHOP solution and support for the digitalisation of business processes. NORDWEST works closely with its approximately 1,255 specialist retail partners.