Opinion: The competitive landscape of the wholesale industry is changing

Holly Franklin is the head of new business at HIM & MCA Insight


The wholesale market is worth more than £29bn, with the eating out and convenience sectors both enjoying continued success. However, it’s facing an increasing amount of competition from not just within the channel, but from outside influences as well.

The HIM Wholesale Report 2019 highlighted that customers are increasingly buying products from outside the industry. This is primarily driven by foodservice operators, with 38% using supermarkets or discounters to buy products for their business, and one in five are turning to Amazon to meet their needs. While for retailers this isn’t of the same level, we still see a proportion of them sourcing products from outside of wholesale.

Read more: Permanent shift towards grocery delivery, says report

The worrying insight is that when wholesale customers are using other channels, they are doing this at least once a week. For example, of the 38% of foodservice operators who are using supermarkets or discounters, 40% of them are using them at least once every seven days. When we look at the key drivers to wholesale, we know that for the delivered route to market, 48% say it is a planned top-up mission in which they are picking up a few items for their store.

For these trips, they are citing reliability, value for money and availability of stock as key drivers. This has changed over the years. In 2017, the key influencers to choosing a delivered wholesaler was much more service-led, such as speed of delivery. Focusing on the depot-visit route to market, the main reasons for choice of depot are service-based.

The location of the cash and carry depot being the main one, followed by staff friendliness and helpfulness, with the latter having grown in importance by more than 12 percentage points over the past two years.  This doesn’t differ hugely by category.

However, we do know that soft drinks are the most purchased category for retailers in both routes to market, followed closely by other impulse categories such as crisps and snacks.  Case price remains the most important factor when it comes to foodservice operators.

This is unsurprising, as they tend to purchase categories that provide ingredients for their dishes.While both routes to market are often discussed separately by suppliers and wholesalers, the key is to ensure they are considered together, as they directly impact on and support each other. If customers shop across both for one wholesaler, they are more likely to be engaged with this wholesaler across the board.

Read more: Eating out market to decline by 60-70% by end of year, predicts report

Undoubtedly, the growth of online, and apps specifically, will continue to change shopper behaviour in wholesale.This can already be seen through barcode scanners, which encourages gap scanning from a retail perspective and will therefore reduce the decision-making process that may be seen in other routes to market. The biggest question, though, as we continue into the new decade, is what truly is the wholesale channel?


 

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Paul Hill
Paul Hill is the Editor of Better Wholesaling. Paul can be found on Twitter on @BW_PaulHill, or can be contacted via paul.hill@newtrade.co.uk and 020 7689 3376.

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