The cash and carry depot remains a pivotal part of the retail wholesale sector in 2019, although not necessarily in the same way that we are used to. In the four years leading up to 2018, the volume of retailers using a depot for top-up purposes rose from 14% to 78%.
In comparison, the number of retailers using delivered wholesale for their main stocking mission increased from 23% to 89%. This highlights a clear shift in retailer behaviours towards the different route to markets, and as this trend continues to gather pace, there is a huge need for wholesalers to get to grips with retailer trends in order to maximise sales within the space they operate in.
In essence, a higher demand for convenience is driving this shift towards using delivered wholesale as the main route to market. Higher wage bills driven by increases to the National Living Wage, tighter legislation, stronger competition and uncertainty surrounding the outcome of Brexit are mounting pressure on retailers’ income, and are key catalysts for retailers wanting or needing to spend more time in their stores, minimising time spent elsewhere.
Depots provide the perfect venue for a quick top-up mission when certain products are running low. However, a main shopping mission would require them to be off premise for a considerable amount of time, during which they may be required to either need to be closed or pay another member of staff to provide cover.
The HIM Wholesale Report 2018 identifies the three main drivers that delivered wholesale is offering: value for money, reliability and acceptable prices. Price is clearly a huge factor for retailers when choosing which wholesaler to use. Although delivery costs and other premiums can occur when using a delivered wholesaler, many retailers must be of the view that the costs of leaving their business regularly to visit a depot are higher.
For a cash and carry, the main driver in choosing where to go is the location. Unsurprisingly, retailers are driven by what is closest to them in order to limit the amount of time they spend away from their business. In addition, availability, value for money and ease of shop have all grown in importance over the past year. In contrast to delivered wholesale, cash and carry wholesalers need to focus on having a tight, well-stocked core range rather than a full range in order to satisfy retailer demands for availability and ease of shop.
Similar to convenience stores, cash and carry depots need to be designed in a way to satisfy the mission of the customer. Retailers are increasingly using depots for a top-up mission, so depot layout needs to be focused towards speed and ease of shop. Some 71% of retailers still use a list when visiting their local depot, so they are on a clear mission to find certain products.
Having a clear flow that focuses on core convenience products and allows retailers to navigate categories, brands and products is vital. Clear communication to enhance the shopper experience, highlight value and drive impulse purchases are also crucial, as retailers look to speed up the top-up process and become harder to influence.
Giorgio Rigali is the communications manager at insight business HIM