A colleague showed me a crowd funding pitch for a digital disruption business, which is aiming to be an online consolidator for retailers to buy direct from suppliers because, and I quote: retailers are “squeezed by middle men who make the vast majority of margins.”
This got me thinking, I meet quite a few people connected to wholesale and retail convenience. During these meetings over the last year to eighteen months, I have come across quite a few business propositions that are based on the principle that “wholesale has had its day”, people have said to me “brands are fed up with wholesalers, they get in the way – they want to go direct to the retailer.”
As a Director of TWC, this is quite key – our core customer base is wholesalers and if their future is in peril, we need a plan B. But is it? What seems to be happening is that, in the case of the crowd funding opportunity, some very clever people have sat in a room together, looked at the wholesale route to market via convenience retailers and not understood the nuances of a very complex industry. In other cases, entrepreneurs think that there is money to be made from brands if they cut out the wholesaler or “middle man”.
Maybe it is time for wholesale to do some PR! It seems as if there is a massive under-estimation of exactly what wholesalers are bringing to the table. A superbly efficient funnel for brands to reach a highly fragmented customer base. Incentives to drive retail / caterer performance and compliance, economies of scale and warehousing and logistics all thrown in.
People have been predicting the demise of wholesale for the last 20 years at least and of the many things Covid has given us – it has demonstrated the power of wholesale to support its customers in the very worst and best of times. According to a report from Barclays Corporate Banking, 53% of wholesalers experienced a fall in demand due to Covid restrictions on hospitality but nearly a third (29%) saw a significant increase in orders. I would certainly say that there is life in the channel yet!
So, in addition to positive PR, what else does the sector need to do? Perhaps the single biggest opportunity is for brands and wholesalers to collaborate even more. It really is a win / win but it does take mutual trust and give and take on both sides. As with most things trading related in wholesale, it is complicated!
Wholesale has always been a useful channel for brands who want to load in volume to hit numbers and it has always been happy to play this role. But at the same time, brands have wanted wholesalers to evidence discipline, stock a tight range, share who the customer is and how that customer is promoting to the end consumer. Perhaps true disruption will come when this cycle is broken, and everyone stops trying to have it both ways? Maybe it would be fair to say that Bestway and Booker have already broken this cycle for the most part? Certainly, suppliers have attempted to dangle bigger investment pots for greater compliance and transparency. As a data company, TWC plays a part in this – our wholesale customers who share data understand that they are stepping over the rubicon into a world of visibility that goes well beyond a joint business plan. The suppliers that this works particularly well with are the ones who make a substantial investment in data and take a “mature” approach to discussions that arise out of what they see in the data.
For our part at TWC, all of our products and services are about encouraging wholesalers and brands to collaborate. We truly believe that both parties ultimately benefit and the sum of the total is greater than their individual parts, which means the trade customer and consumer can also win. This is why we are so excited about our new e-voucher initiative that will be launching soon. It is an innovative solution to drive retailers into wholesale to buy more product – isn’t that what we all want at the end of the day?
Tanya Pepin, MD TWC