Sarah Alhadeff is the insights manager at Lumina Intelligence
To say the last 18-24 months have been turbulent for the wholesale industry would be somewhat of an understatement. Supply chain issues and staff shortages driven by the pandemic and Brexit have caused significant challenges. However, it’s time to look ahead, and whilst there will continue to be headwinds and challenges on the horizon, 2022 is an opportunity for wholesalers to continue to showcase innovation and agility in order to grow. Using brand-new Lumina Intelligence data and insight, we share four key lessons for the wholesale channel in 2022 and beyond.
1. Recipe ideas and inspiration will be a quick win and help to boost engagement:
The wholesale channel has had to contend with staff shortages due to Brexit and absences linked to the pandemic, as well as supply chain issues. The latter has been reflected through satisfaction ratings with almost one in four retailers rating guaranteed availability of products as five out of ten. Communicating availability will be key going forward as shopping behaviour returns to normal. Foodservice operators generally show higher satisfaction with their experience but one identifiable area for improvement is inspiration and recipe ideas which is falling behind in satisfaction ratings. This is a quick win area for wholesalers, who should utilise social media to communicate these ideas to operators, as well as in trade press.
The Lumina Intelligence Wholesale Market Report 2022 found that the top nine wholesale operators in the UK are estimated to have seen turnover growth slow to 3.7% from 3.9% in 2021. Traditional wholesalers have fared better, growing share of the top nine wholesalers by 6.5ppts, driven by increased demand in the grocery channel, whilst foodservice wholesalers have seen share decline by 6.6ppts to 7.9%.
2. Continued improvement is needed to meet expectations of the online experience-
Overall web turnover doubled during the pandemic and has continued to grow at a strong +82% post pandemic, which is just above the +76% recorded in app growth (Lumina Intelligence Wholesale Online Retail Report 2021). Online revenue for foodservice wholesale has similarly shown a strong upward trend in 2021 (+129%), following a challenging year of trading in 2020.
The devices which retailers are using to order online reflect the impact of innovations in the channel. Progressive Web Apps (PWAs) have grown share of ordering occasions in 2021, against iOS, android, and web (Lumina Intelligence Wholesale Online Foodservice Report 20221). A progressive web application looks and behaves in the same way as a native app, making them extremely fast, easy to add to the home screen of a smartphone and can operate offline. The growth in this method of ordering means that retailers are becoming increasingly accustomed to an ever-evolving level of convenience which will increase expectations of the online experience.
3. Wholesalers have a key role to play in HFSS education
New volume and locational restrictions on products containing high levels of fat, salt, or sugar (HFSS) are coming into effect in October 2022, which will have a notable impact on retailers and suppliers. Symbol retailers are more likely to have heard of this regulation (64%) than independent retailers (42%).
Regular newsletters and webinars ran by wholesalers informing retailers of updates on legislation and how to adapt will be valuable, as well as signposting retailers towards trade bodies including the ACS and FWD for further updates. This is important because the Lumina Intelligence Wholesale Market Report 2022 asked retailers what support they expect from wholesalers around HFSS regulation and found that half expect updates on legislation, with recommendations on promotions and range next most important.
Only 6% of foodservice operators are very worried about additional legislation being introduced in the hospitality market, despite rules banning free refills on sugary drinks coming into effect in October 2022 too.
4. The future must be green
Sustainability is the top business initiative being prioritised over the next 12 months (Lumina Intelligence Top of Mind Business Leaders Report 2021). This applies to 69% of grocery retailers and 85% of eating out professionals, making sustainability more of a business priority than innovation going forward.
Whilst sustainability may have taken a backseat for wholesale during the pandemic, the COP26 summit has only heightened awareness of the role the food and drink industry must play in creating a more sustainable future. Retailers and operators are increasingly committing to sustainable business initiatives in response to growing consumer demand, which will in turn increase the pressure on wholesalers to follow suit. This can be achieved through more efficient practices which reduce carbon footprint and food waste, as well as working with retailers to keep up to date with evolving conscious consumerism trends.
