I think most seasoned wholesale practitioners knew that further changes in the structure of the UK wholesale sector were going to happen…but most thought they would take place over a 3-5 year timeframe rather than the breakneck speed of change we are seeing now, with Bidfood, JJ Foodservice and other wholesalers launching direct-to-consumer (DTC) service. We’ve recently seen seismic shifts in consumer purchasing behaviour, coupled with ordering and fulfilment challenges by UK grocery retailers.
TWC execs Tanya Pepin and Tom Fender recognise the merit of the decisions by these trade-only wholesalers to go ‘DTC’ but there are some obvious challenges to overcome. Here are just a few:
- Does this have longevity beyond COVID19 – minimum order quantities are higher than retail – which is fine whilst families are stockpiling….but longer term?
- Are foodservice packs appropriate for consumers, both in terms of pack size, quantities…and design/branding…. or will the wholesaler need to extend its range?
- Delivering to consumers’ homes is no easy task (as traditional grocers have recently demonstrated)
- Will consumers be able to add-to or edit orders before delivery is due? If so, when will the ‘cut off’ time be?
- Will consumers accept a minimum spend of £79-£100 per order, with payment required in advance?
- Will consumers be comfortable with lengthy wholesale terms and conditions versus the ease of an online shop with Tesco?
- If Ocado is struggling with web traffic capacity, are wholesalers moving into this space going to find it any easier?
- Dealing with consumers will massively increase these wholesalers’ customer bases – on the face of it this sounds great but the practical issues of servicing a much larger number of customers during a crisis brings its own challenges.
Ultimately – the consumer will probably be the winner….as consumer choice will increase. Consumers will be able to buy groceries from supermarkets (bricks and mortar, and online), convenience stores, petrol forecourts, discounters, wholesalers (including Booker products in Tesco), Club Outlets (Costco), subscription services (hello fresh), market stalls, farmers markets…. Oh and, of course, Amazon too. And that’s before we start talking about Foodservice.
We have two further questions:
Firstly, do consumers actually want this wide a choice long term? You ask them – consumers always say ‘yes’ but it will be interesting to see where they end up spending their money, because actions speak louder than words (so keep an eye on sales data, not what shoppers say they will do).
And secondly, the thing that makes Foodservice operators like Bidfood, JJ and many other wholesalers so successful is their very specialist knowledge. Will they lose part of their DNA by becoming a generalist?
Notwithstanding the current uncertainty, the one thing we @ TWC applaud is wholesalers taking on the mults. For too long we have sat and watched the retail multiples trying to erode into wholesale; it is great to see our channel finally taking on the mults in their own backyard (and consumers’ front door steps) – literally!
Stay safe everyone……
Tom Fender, Development Director, TWC
Twitter: @Tomhfender. @TWCGroup