How will supermarkets making a play in wholesale affect your business?

Martyn Fisher analyses what yet another supermarket play in wholesale means for the channel

As part of a strategy to “work with new partners to grow our business and respond to rapidly changing shopper habits”, Sainsbury’s announced that it will be supplying food-to-go products to a number of WHSmith stores in high-footfall areas, such as airport concourses and railway stations.

Although the move is small beer compared with Sainsbury’s bid to merge with fellow grocer Asda, it is particularly noteworthy when it comes to FMCG wholesale, as, alongside Tesco’s deal with Booker Wholesale, Morrisons’ supply arrangement with Amazon and Co-op’s purchase of Nisa, it represents the latest attempt by a supermarket giant to muscle in on this channel.

Bryan Roberts, global insights director at retail marketing company TCC, believes that each deal should be looked at on an individual basis. “All of these deals and collaborations have been so different,” he says.

“What is beyond doubt, though, is that the once clear demarcation between retail and wholesale is virtually redundant, with a blurring of business models, channels, brands and relationships.”

David Gilroy, of retail consultancy Store Excel, goes even further in his assessment: “Catering departments in Tesco Extra is just the start, and foodservice customers are just a different kind of consumer,” he says.

“On the retail front, look at the increase in sales in Nisa stores with Co-op’s ranges and offering. This is a real threat to wholesalers.”

So, what can you do in order to stave off any damaging consequences of such changes?

The necessary response lies in three key areas: raising standards, improving quality and broadening your appeal.

In particular, fresh food standards are something that need to be continually raised. Gilroy pinpoints this as a field in which most wholesalers are “weak and vulnerable, with the exception of Booker, Bidfood, Brakes and JJ Food Service”. 

In a similar vein, food-to-go and coffee-to-go are now crucial to convenience stores. As a result, you need either to develop an offering, or partner with companies which already have one.

Gilroy also advises you to make certain that your symbol offering is continually driven forward and is right for today’s consumers; be sure that the supermarkets are not beating you on service, be it checkout speeds or delivery lead times; and have stock availability levels that are at least equal to that in the supermarkets, to make sure your customers regard you as reliable.

Having more personalised relationships with your customers and staying close to them in terms of responsiveness to their needs is also essential, Gilroy adds.

From a behavioural point of view, Roberts stresses that it is vital you remain vigilant to protect your territory against further incursions from grocers looking to increase volumes and broaden their routes to market. 

“It would be easy to behave defensively in the face of the encroachment of major retailers, but this is a situation where attack will be the best form of defence,” he says.

“As the multiples’ involvement in wholesaling gathers pace, you should give your customers fewer reasons to defect.”

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