27 September 2016
Wolseley UK has announced a major programme to transform the way it serves its customers following a wide-ranging review of its plumbing and heating operations. Our plan is based on (i) a deep understanding of what our customers value and what makes them successful, (ii) maintaining and growing our specialist expertise, and (iii) delivering a step change in our operational efficiency and consistency.
The resulting transformation plan and £100m investment will make Wolseley UK the first choice specialist for trade customers delivering the highest levels of customer service in the industry coupled with a leaner, more efficient operating model which will significantly improve service levels, product availability and choice. The plan is likely to result in significant headcount reductions and branch closures within the business, subject to employee consultation, but it will also deliver sustained investment to help transform our service and improve performance. The Civils, Utilities and Infrastructure businesses in the UK are unaffected by the review.
Wolseley UK’s proposals to transform our business have three central building blocks:
1. A well defined offering to our customers – our ambition for the business is to consistently deliver the best service in our industry, with knowledgeable and expert advice, the fastest and most reliable product delivery and a true multi-channel experience for our customers.
To achieve this, we will provide a simple offering for our customers through two distinct customer propositions: one dedicated to the needs of medium and large specialist trade customers and one for small specialist trade customers. We will develop Wolseley as our go-to-market brand for our larger regional and national customers and over time simplify our roster of other brands. This will enable our customers to access all of our expertise at a new range of branches in one place. We will continue to invest in training and developing our people to ensure we offer the best service consistently across our network. We will improve our pricing to become more competitive and attractive to our customers especially on the products that matter to them. Our service offering to our customers will also be truly multi-channel, providing a seamless way of doing business through branch, sales, on-line, or on the telephone.
2. A unified branch estate and single sales network – our customers will enjoy visiting the best branch network in the UK designed around a better customer experience in the right locations to meet their needs.
As part of our commitment to the UK we will provide a further £40 million of incremental investment over the next three years in newly refurbished branches designed around a better customer experience and utilising the latest technology. In future, we will create two types of branch to meet the needs of our customers. A local network of c.450 branches will offer local expertise across a broad range of product categories. Additionally, a network of c.80 larger destination branches, will provide in-depth expertise in all areas. These sites will be open 7 days a week and each will have its own dedicated bathroom showroom. All of our customers large or small will be able to use our whole branch network. We will also bring our sales network together – creating one organisation, providing larger customers with a single point of contact. This will help us provide specialist knowledge and geographic coverage whilst providing a more consistent and seamless service.
3. A new operating model - we will provide the best product range in our industry with flexible delivery and collection times to suit our customers’ requirements.
We will maintain an efficient logistics and supply chain network with high rates of product availability and choice, which our customers depend on. This will include creating new transport hub locations to deliver our products nationwide with consistently high standards of both branch replenishment stock and customer orders to meet demand. Efficiency savings will be generated from better stock management across the network.
The review has identified an opportunity to drive efficiencies and lower our cost base to strengthen the business. Regrettably, we expect this will result in the closure of around 80 branches across the UK and up to 800 redundancies. The reorganisation of our logistics and supply chain network, which we plan to complete over the next two years, will result in lower overall capacity requirements in our UK supply chain. This will enable us to operate from three regional distribution centres in the UK instead of four which will significantly reduce our operating costs. On this basis, we propose to assess the feasibility of our Worcester DC as the changes in our plan are put in place. This means that whatever the outcome of the feasibility assessment, we believe that this part of our strategy will not impact roles or the number of roles until 2018.
A period of consultation will now commence with colleagues at affected sites. Overall, the reorganisation will take two to three years to complete and is expected to deliver annualised cost savings of £25 million to £30 million. It is too early to provide details of which branches will close, either by region or brand identity. The Company will work through this in the coming weeks and inform and support colleagues accordingly during the consultation process.
Patrick Headon, Managing Director of Wolseley UK, said:
“We have put the customer at the heart of this review with the aim of making Wolseley the first choice specialist merchant in our chosen markets. We have a great business in the UK and there are continued opportunities for growth. I’m confident the transformation programme will drive better customer service and employee engagement and improve our financial returns.
“The trends in our profitability have been disappointing and we need to take action to improve our customer proposition and the efficiency of our business. We have an outstanding team made up of hard working and dedicated people across the UK and we are very conscious of the impact this transformation of the business will have on some of them. We are therefore committed to carrying out this programme as sensitively as possible, using voluntary means to achieve the proposed headcount reductions wherever possible. Over time I’m confident our proposals will benefit both our colleagues in the UK and the customers they serve every day.”