Opinion: Traditional wholesalers will need to up their game or risk going out of business

Who would have thought during the retail battles of the past four decades that the major retailers would move their attention to the dark world of wholesale? Especially considering the issues of too much retail space, the inexorable growth of discounters and the exceptionally high costs of extending retail brands.

Perhaps, given the major changes we have experienced, this was an inevitability. But if it was, then why has it come as a major surprise? Why has this happened and what will the future landscape look like? Who will be the winners and what do we need
to do to ensure success?

There are seismic issues driving this: more single households, avoidance of waste, healthier eating, and the blurring of foodservice and convenience. All of these have led to massive changes in the way we purchase and consume food. There’s also the public’s greater knowledge of environmental issues and the need for change, as well as an increasing amount of regulation on core categories such as tobacco and soft drinks.

Read more: P&H: A wake-up call

The health lobby voice will also get louder, with diabetes becoming a major issue, alongside growth in meat-free diets.

Environmental issues are also set to have a major impact on petrol forecourts as the type of fuel we use to power our vehicles changes our needs and frequency of site visits. Add the confusing political climate into the mix and you have a perplexing future landscape.

However, all is not bleak. There are numerous tailwinds that continue to benefit the wholesale customers. Consumer trends continue to be positive with more people shopping locally and regularly, with accessibility being an important driver.

The convenience and foodservice sectors are also continuing to grow, with services such as Amazon collection points driving additional footfall.

All of this, together with the requirement for more fresh food, is resulting in growth of delivered wholesale. Given all these changes, it should have come as no surprise that the major retailers would want a piece of the wholesale action.

This, then, means that the future landscape will be different, as major retailers continue to move into a form of wholesale – whether it be delivered or in a store format – Tesco, Booker and Morrisons have made their intentions clear, with Asda and Sainsbury’s making moves. But who will win and how?

Traditional wholesale can still be profitable if the operators manage to find ways of creatively reducing costs using technology to help themselves and customers. Emerging categories also offer opportunities, such as CBD (ensuring that fair share is achieved, unlike vaping, which was lost to specialist stores and online). Alongside this, core categories and services that customers expect to find still need to be well represented.

Furthermore, correct supplier support of the wholesale sector will be key. Suppliers will win if they manage to understand and adapt to the complexity. It will be important to understand the value of wholesale, so they’ll need to structure and resource accordingly in order to make sure that the quality of account management matches the strategic importance and complexity of the sector. They’ll win if they focus on consumer trends and real NPD that generate incremental sales, differentiation and disruption.

In short, only the fittest will survive. Major retailers will become major players in wholesale and traditional players will need to up their game. The harsh results of not adapting to change in a timely fashion can be seen in many business failures.

Martyn Ward is the co-founder of consultancy firm Ward & Hagon

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Paul Hill is the Editor of Better Wholesaling. He can be found on Twitter at @BW_PaulHill, or contacted via paul.hill@newtrade.co.uk and 07960935659.


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