Real Time Wholesale Prices now Available to Small Businesses

This week, we have now made it possible for any small business – café, bar, restaurant, caterer, convenience store etc. to have access to real-time prices of wholesalers to find out which provides the best price for specific products.

To date, the transparency of these prices have not been available to small companies and only been made available for wholesalers and manufacturers who use the prices to work out what their pricing strategies for promotions are.

As the monthly subscriptions paid by these wholesalers are much higher than small businesses can afford, it has not been possible to provide this for small businesses until now.

Hence, we have now launched a new subscription where small businesses can pay as low as £2.95 to get a day pass and see all the prices of products. Alternatively, you can also opt for the £9.95 per month subscription and have access to all prices every day, which we feel provides a very affordable option.

So why do you need real time pricing from wholesalers?  If you can see what the spot price of a product is and then compare to what you’re currently paying, then you can see if you will be saving some money just by moving wholesalers. Doing this once a week is good practice to keep an eye on the bottom line and making sure you’re getting the right price. With a lot of products you’re selling being pretty standard products, it then just comes down to which wholesaler you buy it from and at which price to enable your business to make as much profit as possible.

Wholesalers Improving their Online Experience

We have recently seen that wholesalers have started to improve their websites and online experience with new websites being launched over the last few months.

We first saw JJ Food Service with a newly improved website, closely followed by A to Z Catering and Nila has now launched their new website last week too. All the websites look much more slicker than before, with sharper photos and better user experience for the customers with an easy to use basket system.

Is this the way shape of things to come? We certainly think so and believe this has been long over due. Wholesale traditionally has been slow to adapt to the internet with user experiences we take for granted today, and we believe this adds momentum to purchasing online with the trips to the cash and carry becoming less and less frequent in the future.

Buying online has its advantages for the wholesalers. Firstly, there is less reliance on taking calls over the telephone, which means employing less staff in the call centre. Additionally, the orders are more accurate online as the user has put their own order into the system which equates to fewer incorrect orders.

Additionally, with more orders made online rather than customers coming into the store, less space is required for the depot and hence money can be saved in rent if the business.  For a lot of wholesalers, the land is bought freehold and so this doesn’t make such a big difference apart maintenance costs can be reduced as a result.

Once the wholesaler is online then there is the new task of attracting customers to the site. This involves SEO, optimising the site and conversion rates, as well as not losing any customers prior to the purchasing phase. This is a completely new area for the wholesaler and we recommend seeking expert advice in this.

It is great to see that the wholesale market is moving online with enhanced user experiences and we look forward to further advances in the near future too.

Food Suppliers Fear of Being Bullied by Supermarkets

Christine Tacon, the Groceries Code Adjudicator told peers yesterday that the watchdog had found it difficult to get suppliers to come forward with evidence of breaches of code of practices.

Thus, it appears as though the suppliers are all scared of being black listed and facing a potential loss of business if they tell about the current business practices implemented by the supermarkets. This has been further evidenced by the YouGov poll that says that 58% of suppliers feared retribution from the supermarkets.

Does this happen in the wholesale industry too? And if so, what can be done about it?

Typically, there is more competition in the consumer grocery business from the supermarkets than in the wholesale industry. The main reason is that the size of all the wholesalers varies, from very small wholesalers to the largest which is Booker, with £4bn sales. This is predominately cash and carry goods which are all branded products and so part of big manufacturing companies anyway.

Smaller food suppliers who supply the catering distribution companies like 3663, Brakes, Fresh Direct etc are squeezed on prices, but the products get absorbed into restaurant, café food etc and so the prices are not advertised nationally. The end consumer does not get to see the prices of tomatoes, cucumbers etc. and only sees the prices of the sandwiches, baguettes etc. which makes it less transparent. Hence, there is not a big price war on the supplier side.

Thus, we do not anticipate a similar supplier squeeze to the supermarkets in the wholesaler industry and although suppliers will be squeezed to some extent, but not to the extent of that being faced by the supermarkets.

Food Companies at Risk of Collapse – Impact on Wholesaler Market

It’s no secret that the number of food companies at risk of collapse has gone up over the last few months. Indeed, Begbies Traynor, insolvency specialists have reported that the number of food companies at risk of insolvency has risen from 2,878 in 2013 to 4,550  in 2014.

This is largely due to the pressures put on them by the supermarkets as the supermarkets in turn face competition from the discounters. Thus, it is inevitable that some will not survive, and this is happening all too swiftly in today’s very competitive market.

What kind of affect can this have on the wholesale and foodservice market? Well, for a start the foodservice and wholesalers are buying their fruit, vegetable and dairy product supplies from the farmers and food suppliers who are receiving less and less revenue from the supermarkets. Without covering their costs, their will in turn collapse and with it, all the other businesses who they supply will be affected.

This means that with fewer suppliers, supply is reduced and the prices of the products will go up, affecting the wholesalers and the end customers too.

Additionally, with the collapse of many suppliers, the wholesalers will need to find alternative sources quickly and hence may need to go abroad to secure the right prices or look at more expensive alternatives at home. This may have an impact on the quality of the produce and the cost too. It’s a balancing act that needs to be correctly addressed as there is a knock on effect for all.

Wholesalers and food service distributors should have contingency plans in case this does happen, to ensure that their own service to the customer is not affected. We hope as many food suppliers as possible are able to survive, with the help of Government grants as the problem is not just for them, but the whole grocery industry as a whole.

Our Forecast for 2015

It’s been an interesting year for wholesale and foodservice sector in 2014 with a strong performance and little of the drama that has forsaken the supermarket industry this year.

The year has been one of transition from the traditional cash and carry model to one being dominated by internet and click and collect sales. We see this trend continuing into the next 5 years with steady growth year-on-year.

With internet sales having reached over £1bn this year with big contributions from both Booker and Bestway, the convenience of ordering online is becoming a stable feature for customers. This still only represents 4% of the overall market, and so there is still room for much further growth to be seen in internet sales sector. We forecast the market grow to 10% within the next 10 years.

Mobile apps have also started to emerge with a new app created by Bestway as one of the first apps in this sector. Time will tell as to how popular mobile ordering will become, but we forecast that it will continue to grow as smart phones become a mainstay of the ordering market.

With all this online presence continuing to grow, data will become increasing more important with savvy wholesalers making decisions based on the data that they have in real-time to target new and existing customers with special offers etc. We see the emergence of data as the next big change in wholesale and the wholesalers who can adapt the quickest in the next 5 years, will enjoy the biggest growth.

We also see the market becoming more and more competitive as the discounters enter the convenience store market. With lower prices and a different range of brands, market share will be lost to the discounters which will have an added affect on wholesalers too.

Overall, we see opportunity in 2015 for wholesalers to adapt further to technology through online websites, mobile ordering and employing big data techniques to engage customers and refine their price strategies going forward. Those that can adapt the quickest to changes in the market will have a competitive advantage in the coming years.

We wish you all a Happy New Year and prosperous 2015!

Supermarket Price Wars Affect on Food Producers and Wholesalers

It’s been no secret that there’s a price war going on at the moment between the major supermarkets due to the attack from the discounters. This may be good news for consumers, with lower prices in store and deflation of food and drink prices, but not so good news for the food producers.

Research from Moore Stephens has shown that 146 food producers went into administration this year, compared to 114 last year, which is a worrying sign.

With the supermarkets putting added pressure on supplier costs, this has meant that the margins made by the supplies are far less than before, and can tip the supplier into administration. This coupled with the long payment terms of the supermarkets means that the suppliers have a cashflow problem, and end up running out of cash.

Are we due to see the effects of this in the wholesale market? At the moment, there may not be a price war waging between the wholesalers, but the food suppliers also supply to wholesalers and food service companies too. Thus, with fewer suppliers in the market and less competition, this may lead to higher prices in the future too.

It will be interesting to see how prices will be affected in 2015 with fewer food suppliers, and the impact of the discounters moving into the convenience store sector too. 2015 will certainly be an interesting year in the wholesale market!

Poundland Sees 12% Rise in Profits – Should you be stocking Value Brands?

Poundland this week reported a 12% rise in profits for the half year to £9.3m, and like-for-like sales were also up 4.7%.  This clearly suggests that shoppers are going for the discount brands, and looking to get their shop as cheap as possible. What impact does this have on the convenience stores in local areas?

Well, for a start, consumers are becoming more price sensitive and so are trying to save money at any suitable opportunity. This puts pressures on the price competition between convenience stores, Sainsbury Local, Tesco Metro etc.  and the discount stores too.

So should the local convenience store be selling more of the low value branded goods, then the branded goods themselves E.g. should a local convenience store sell own label tomato ketchup rather than Heinz ketchup? Or are these customers still going for the branded goods, and are only after the convenience? And with limited shelf space, then the shop owner has to be very picky about the products that they sell too, so the choice is even more important.

It’s very difficult for the local convenience store to compete just on price – any Sainsbury’s Local or Tesco Metro can blow them away on the price, with their enhanced buying power. The main reason why a customer is coming into the convenience store is literally for convenience – if they went to a Tesco Metro then they would have to walk there, try and find the product, walk around the large store, queue up to pay etc, which takes time. To buy something simple like a bottle of tomato ketchup, then it is easier to go to the local convenience store and be in and out in a few minutes.

Hence, as speed is the key, seeing the product the customer wants to buy very quickly is important. Hence, the brand is very important in this regard as the customer can identify with the brand quickly and easily, and make a choice easily.

Thus, for this reason we recommend that the convenience stores continue to stock the popular brands and stock own label products for non-key items e.g. custard cream biscuits.  A focus on the gross margins of the products and the convenience aspect will ensure that convenience stores will continue to flourish and be a central point for the local community for the foreseeable future.