The UK wholesale market saw growth of 2.8% in 2020, although this slowed year-on-year due to the impact of the COVID-19 pandemic on operations, according to a new study by Lumina Intelligence.
Its UK Wholesale Market Report 2020 found that the sector had to deal with 'record levels of demand' from the retail industry, while foodservice wholesalers faced a 'catastrophic impact' due to the prolonged closure of the HoReCa channel.
As a result, overall growth for the wholesale sector is down on the 4.4% growth it reported in 2019.
“In line with what we are reporting for grocery retail vs the hospitality industry, the coronavirus pandemic has resulted in the wholesale market becoming polarised," commented Blonnie Walsh, head of insight at Lumina Intelligence.
"Retail wholesalers have seen unprecedented demand surges, which, as well as causing supply chain pressures, has resulted in strong growth across the year. For hospitality, the picture is a lot bleaker, with the ever-changing restrictions imposed since the start of the pandemic having a catastrophic impact on the industry, resulting in around a third of turnover being wiped out.”
The report notes several ways in which the wholesale industry has been forced to evolve due to the pandemic, with increased demand for delivery resulting in higher basket values, for example.
It said that restricted mobility and nationwide lockdowns have led to a surge in demand, particularly in convenience channels, with reliance on wholesale delivery accelerating as a result.
Elsewhere, there has been a rise in 'direct to consumer' selling from foodservice wholesalers, to offset losses due to hospitality closures during lockdown. For example, JJ Foodservice launched a D2C service, JJ Home, in July of this year, while Bidfood formalised its Bidfood at Home D2C business.
Lumina Intelligence also reported that 'hybrid' wholesalers, such as the Co-op and Morrisons, saw their share of the wholesale sector grow from 6.5% in 2018 to 9.2% in 2020, while Asda made roads into wholesale at the end of last year with the opening of its first cash and carry style warehouse in Bristol.
On The Front Line
Commenting on the overall health of the sector, Walsh noted that the wholesale industry has been "very much been on the front line throughout the pandemic. Retail wholesalers have worked tirelessly to keep stores stocked enabling retailers to support local communities. Foodservice wholesalers have had significant forecasting challenges, as the government imposed strict guidelines on hospitality businesses at short notice, but we’ve seen some innovative responses to this with the development of direct-to-consumer solutions.
"As we enter 2021, the measures the government intend to impose until a vaccine has been widely distributed remain unclear. The UK wholesale industry needs clarity to ensure it is as prepared as it can be to support grocery retailers and hospitality operators, rather than continuing to second guess what will happen next.”
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.