In a time of upheaval and disruption, wholesalers should take advantage of opportunities, argues David Gilroy
The word “disruption” has come to the fore over the past few years. It’s fashionable and edgy to be a “disrupter”.
In the business context, it is taken as stripping down an existing market, reimagining it and busting it wide open to operate in a way that beats the current players, usually working from the customer experience back through the value chain. The obvious examples are Amazon and Uber. Although neither planned nor intentional, Covid-19 is the mother of all disruptions. It is the disrupter’s disruption.
Indian author Sadhguuru Haggi Vasudev says: “Disruption always has hidden opportunities. The question is whether we are brave and competent enough to seize the opportunity. What looks like a tsunami is a dream come true for a good surfer.”
During the lockdown, consumer spend has unsurprisingly switched away from out-of-home to in-home. Mintel reports that 55% of Britons are planning to cook meals from scratch at home and 33% have increased purchases of longer-life products such as UHT milk and canned goods. In the June edition of Better Wholesaling, Holly Franklin pointed to the number and frequency of foodservice operators purchasing from the supermarkets and discounters, and the threat of wholesale customers purchasing out of channel.
This is undoubtedly true and has been a trend for a number of years. I would be reframing the question: ‘What is the channel in this context?’ There are around 48,000 small food and drink retailers and some 250,000 hospitality outlets in the UK. Then there’s the 4.5 million self-employed workers. Many running their businesses from home. So, to address Vasudev’s challenge, are there any opportunities emerging from this situation?
Yes, there are, and they reside in customer and range diversification, and in targeting this significant group of hybrid business consumers. I’ve long argued that wholesalers should be broadening their customer bases.
Covid-19 has accelerated a number of trends such as home delivery, online and mobile device app purchasing. Broadening customer reach is another such trend that is now absolutely right for the times. A few of my self-employed contacts have started shopping at cash and carries, and they love it. They like the bulk displays, the case sizes, the prices and the atmosphere.
Costco has pretty much proved this and JJ Foodservice has just announced it is back up to its pre-lockdown sales levels by attracting new customers. Wholesaling is a world not really known to or understood by ‘non-trade’ consumers.
Yet wholesalers have a great deal to offer this audience: wide relevant ranges, great value, logistics expertise, skilled people in all areas and potentially exciting shopping environments. I am confident that self-employed business people would respond very positively to effective marketing from wholesalers – for both purchasing in depot and home delivery.
The initiative of home-delivered food boxes and meal kits appears to be one such exciting prospect. Marketing company Cardlytics reports that grocery boxes sent to people’s homes soared by 114% in April.
Its commercial director, Duncan Smith, thinks that “the gradual rise of the door-to-door economy will become a relentless surge”. This seems a perfect medium for wholesalers, and the offering could be extended to cover such things as: seasonal boxes (Christmas, Ramadan, Halloween), event-led occasions (football tournaments) and professional cleaning boxes, as well as home office catering.
The change to one-metre distancing at the start of this month will enable the hospitality sector to restart, but it will be a while before pubs and restaurants return to normality. Instead of worrying about the incursion threat from the supermarkets, wholesalers could be pushing back in the other direction to capture business in a new and exciting market that is rightfully theirs.
David Gilroy is the founder and managing director of Store Excel