The UK wholesaler sector is experiencing positive trends, particularly among those companies who are innovating and expanding their digital capabilities. Recent figures show that ecommerce sales in the UK’s wholesale sector grew by 16% year-on-year throughout 2020. This increase was driven largely by investments in sectors such as technology and pharmaceuticals, with business owners taking advantage of the digital tools available to them to stay connected with consumers during the pandemic.
Furthermore, a number of wholesalers report that online spending is likely to remain robust, even after the pandemic ends. As a result, it is likely we will see an increase of digitisation within wholesaler businesses across the country as they continue to grow and adapt in response to these market shifts.
Wholesale industry market trends
Wholesaling has experienced the following developments over the past few years, despite the fortunes of individual sectors differing:
- Retailing and service sectors have seen the expansion of large multiples. Quite often, these companies bypass traditional wholesalers because they buy directly from manufacturers or distributors
- Cash and carry facilities were introduced by many wholesalers to keep prices as low as possible
- There is a huge increase in ecommerce, with both wholesalers and retailers selling online. Small online sellers, such as eBay traders, have expanded the potential customer base for wholesale businesses. As multiple chains have migrated to out-of-town locations, the number of independent retailers has increased as well. Many new businesses have been set up on the High Street to fill the gaps left by these multiple chains. Despite the fact that many of these businesses close almost immediately after opening, others are ready to take their place, and for the moment, the general trend seems to be upward.
- To help independent retailers survive, wholesaler/retailer partnerships and alliances have emerged (including partnerships between wholesalers and buying groups).
- It is becoming more common to operate multiple depots instead of just one
- Food safety regulations and packaging waste regulations are just a few examples of the increasedregulation in many sectors
- Many wholesalers had to adjust their premises due to tobacco display bans
- High fuel and overhead costs made trading conditions very competitive – particularly during the economic downturn of the late 2000s and early 2010s. While fuel costs have fallen significantly in the second half of 2013, very low prices across the entire retail sector – and especially in grocery retailing – have put pressure on wholesalers. In the second half of 2015 and the first half of 2016, the economic recovery stalled after continuing into 2014. There has been little growth in the economy since June 2016 when the Brexit vote was taken. Consumer spending has been subdued due to increased inflation and limited real wage increases. As far as 2019 and the foreseeable future are concerned, there is littleindication that anything will change. As a result of the Brexit vote, sterling’s value fell, pushing up wholesale costs and causing consumer spending to slow, making it difficult to increase prices for consumers and businesses.
- Price is increasingly important, with customers able to choose from a variety of wholesalers and demanding the best value possible
- Despite falling prices, customer retention issues and declining tobacco sales, wholesale grocery and foodservice sales to independent and convenience retailers are faltering
- Beginning in 2016, wholesalers of alcohol must register with HMRC as part of the Alcohol Wholesaler Registration Scheme and, from 2017, retailers can only buy from registered wholesalers. Beer, wine, and spirits sales have increased as a result.
- In May 2018, Scotland introduced minimum alcohol pricing, reviving the possibility of its introduction in England
There are a few things you need to decide, such as:
- Your business’s viability depends on whether there are enough customers in your area
- If you plan to supply customers with a long-term survival strategy – small independents have very limited chances of success in some sectors due to the dominance of online specialists and large premises-based businesses, and in some cases due to technological advancements.
- What other similar businesses will be in your area that you can compete with
Keeping up to date with developments
Keeping up with industry developments is easy when you join a trade association. A number of trade associations represent the wholesale sector, some of which publish specialist journals relevant to specific market sectors. On their website, you can learn more about the Federation of Wholesale Distributors (FWD) which represents the industry as a whole.
Staying up to date can also be achieved by subscribing to a trade journal. The FWD publishes Wholesale News, which focuses mainly on grocery and food-service wholesalers. The FWD website has more information and subscription options.
Trade shows and exhibitions for your type of business can provide you with a lot of useful information. You can find details of trade shows on the Exhibitions website. The UK’s wholesaler sector trade shows serve as important hubs for businesses to stay on top of the latest market developments and connect with industry players.
These events offer a range of activities from informative talks and seminars, to product showcases, company presentations, and one-on-one networking opportunities. Attendees can also take advantage of discounted deals on products and services, saving companies time and money by getting the best deals available in the market.
With the pace of advancement in the sector constantly changing, trade shows are essential for any business’s long term strategy and success.
Read more: Legal issues facing the wholesale industry
Significant shift in wholesale sector trends within the UK over recent years has seen increased competition from carefully chosen product offerings, coupled with the emergence of numerous new specialist wholesalers, have raised the bar for not only price points but delivery times and customer service as well.
Additionally, more businesses are turning to eCommerce options in order to better meet the demands of customers who are looking for convenience and at-home shopping experiences. Staying ahead of these changes should be a priority for all players involved in the wholesale industry within the UK – understanding how to best support customers is key, as this will provide what they need and steer them toward making enough purchases that will help reach desired revenue goals in today’s market.
Seasoned professional with a strong passion for the world of business finance. With over twenty years of dedicated experience in the field, my journey into the world of business finance began with a relentless curiosity for understanding the intricate workings of financial systems.