Four challenges wholesalers must understand

    There are four challenges wholesalers need to understand if they want their businesses to succeed, writes David Armstrong

    Charles Dickens opens The Tale of Two Cities with the following words: ‘It was the best of times, it was the worst of times…we had everything before us, we had nothing before us…’

    These words may well reflect the current state of our economy, our market and your company – you don’t need me to tell you about the huge pressure on us all at the moment.

    But four key forces are coming to bear on our market that we need to understand and manage:

    1) Low volume growth and increasing energy and commodity costs are squeezing margins all the way through the value chain.

    2) The market is changing faster than ever thanks to the development of the internet and the myriad of tools and apps with which to exploit it.

    3) Traditional channels between wholesale and retail, retail and foodservice, and foodservice- and retail-biased wholesalers have blurred in a way few people could have predicted even a few years ago.

    4) Customers are under pressure, too, and are even more demanding and willing to shop around.

    The challenge for us all is to spot the ways we can navigate around these challenges and deliver growth for our customers that will in turn deliver growth for ourselves.

    I believe the coming years will see both structural and cyclical changes that will improve the way we operate and be beneficial to the customer.

    The acquisition of Makro by Booker will not be the last consolidation play in the industry. Bookers’ purchase of the 30 Makro stores will prove a good purchase as it will provide Booker with extra space in which to operate and suppliers with secure long-term ­volume.

    Wholesalers that embrace new technologies to get closer to their customers, personalise their offerings, and spread knowledge and insight will reap the benefits. It is important not to forget these are enabling technologies that will help reduce cost and improve the efficiency of our own operations.

    Communication and service

    Communication and service is central to success – the best ranges, promotions and pricing are useless if they are locked in an empty room. We (suppliers, wholesalers and customers alike) need to work closely across the value chain to ensure messages are implemented properly to make understanding easy – this applies to merchandising, own-label ranges, price-marked packs and all things in between.
    Execution is critical to success.Companies need to ensure that all their teams are trained and aware of their part in the success of the organisation. The training and development of colleagues need to be seen as investments in the customer, not costs to be cut in difficult times.

    In recent months, I have seen a number of projections that show the future is bright for the wholesale channel, with c-stores and wholesale volumes expected to grow faster than the supermarkets, and the growth of the independent foodservice market equally robust.

    With long-term market conditions looking strong, and taxation and grant support firmly in favour of business start-ups, we have everything before us – it will just need hard work. But don’t all the good things in life?

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    David Armstronghas more than 25 years’ experience in the retail and wholesale market, and has worked with companies during periods of organisational change, including mergers and acquisitions, across a variety of sectors and company sizes. Most recently, David was head of buying at Makro.


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