Suppliers see no wholesale changes
important role in the grocery sector for the next ten years, in
particular in helping brand owners improve their relationship with
independent retailers. But while few suppliers see wholesale as a
major cash generator, most are ready to invest more in improving
their business there.
A survey of suppliers compiled by the Institute of Grocery Distribution (IGD) in the UK shows that some 79 per cent of those questioned believed that that the wholesale sector will still be an important part of their business in 2014, despite the increasing consolidation of the retail industry into the hands of just a few major players.
The survey found that over 80 per cent of suppliers agree that the wholesale sector provides an important vehicle for building brand penetration, and that 61 per cent of suppliers believe that building strong and effective relationships with wholesalers is the most effective way to reach independent retailers.
But the retail sector is undoubtedly where the money is to be made. Just 37.7 per cent of the suppliers questioned said that they saw the wholesale sector as a sales generator for their business, while only 17.9 per cent said they saw it as a way to generate profit.
A measure of the long-term importance of the wholesale sector to most grocery suppliers is the high level of investment planned - some nine out of 10 suppliers said that they were committed to investing in the wholesale sector, while 80 per cent said they operated a sales force which visited individual depots. In addition, 68 per cent said they were devoting more resources to the sector, which the IGD claims will be worth £17.6 billion by the end of 2007.
But if suppliers are keen to invest in the wholesale sector, most feel that they already know how best to spread this investment. Nearly 80 per cent of the suppliers questioned by the IGD said that their company had a good understanding of the needs of the wholesale sector, with some 69 per cent operating separate strategies for cash & carry and delivered operators and 70 per cent using specific strategies to reach retail and foodservice customers through wholesalers.
