Wholesaling is dead – long live logistics with added value!

Wholesaling is dead – long live logistics with added value!

A FACS Report ©

It really is no wonder as the rapid change in the structure of the retail sector takes hold that the traditional wholesaler is feeling the fall out! However the very nature of what’s happened has more than just a few implications for anyone left who plays in this sector!  After all we are only just seeing the first stages of this change.

The Grocery giants have invaded the supply chain.

  • Tesco Booker with a suite of independent symbol brands Londis, Budgen, Premier & Happy shopper plus of course the One stop franchise offer.
  • Morrison’s have opened up a wholesale division and franchise programme supplying McColl’s, Rontec, MPK and others
  • Sainsbury have “franchised?” their brand through the EG group and also trialling with symbol brand simply fresh
  • Asda has piloted a cash & carry type operation in Bristol.
  • The Co-op’s purchase of NISA means the coop brand is being sold not only within those stores but also in the Costcutter symbol. Not forgetting the Co-op is also heavily marketing its franchise operation.

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All of these retailing giants have spread their tentacles into “traditional wholesale space” bringing bigger brands, bigger buying power and a different approach to logistics.

It’s not just their massive buying power they bring to the market, it’s the culture of reverse engineering all costs whilst separating the cost of distribution with the cost of product meaning they can disregard recommended retails and sell at what they wish!

That’s a far cry from how the traditional wholesaler currently buys and generates income from suppliers!

“Over 30 years ago I was the Sales & Marketing manager for the UK’s largest wholesaler, at that stage our multiple retail customers would never have signed off on a supply deal that gave a rival retailer: 

  • Full knowledge of their purchasing by outlet
  • Control over the price they paid and ultimate negotiation with suppliers.
  • Ownership of the consumer identity they would trade under and promotional plan “

How times have changed with probably only BP in the UK and Applegreen in Ireland using their own logistics resource to supply their stores”.

I hope I am wrong but without considerable change the future doesn’t exactly look rosy for the traditional wholesaler. There can be little doubt food service wholesalers will also become competitors as most retailers in the convenience market are aiming to grab shares of the food to go market and food service wholesalers already have multi temperature delivery vehicles.  Not forgetting of course logistic operations.

All of this competition chasing a diminishing pool of independent retailers.

It’s clear that wholesalers are fighting back and buying groups are merging or working together, some wholesalers already have their own foot print in retail running company owned networks. But will it be enough?  

Key to winning

  • Become low cost distributors, across the temperature regimes
  • Provide the right technology
  • The ability to supply multiple retailers
  • Improve trading terms by taking a different approach
  • Sharing the buying power to achieve better costs prices
  • Create symbol supply schemes that command greater discipline
  • Build stronger symbol brands

Not everyone is going to enjoy being supplied by a grocery giant and that opens up opportunities but wholesalers must shake off the old image, exhibitions and trade conferences are great networking opportunities however make no mistake the cost to suppliers is lost in trading agreements.

The grocery giants move into wholesale and franchise is there answer to the problems they have with the Amazon model and discounters, they need the volume of the convenience and food service sector, so they are not going to stop, change is the only answer for “tomorrow’s wholesaler”

Kim Barnard

FACS marketing Services

 

If you are a wholesaler or a supplier and would like to discuss the opportunities that are opening up in the supply chain just call 01604 660698 or 07768 465569 alternatively email kim@forecourtshop.co.uk

 

 

Author: kimbarnard

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