Reacting and Adapting: Wholesalers go Direct to Consumer

As the UK nears six weeks of lockdown, business as usual feels like a million miles away.  The grocery and foodservice sectors have been at the forefront of repercussions from the coronavirus crisis, with wholesalers no exception.  Food and beverage wholesalers are polarised by their markets, with grocery wholesalers adapting to unprecedented amounts of demand, contrasting with foodservice, some of which have lost up to 95% of their regular business as a result of the lockdown. 

Many wholesalers have gone from their traditionally B2B models and started selling directly to consumers (DTC), including Brakes’ new Food Shop venture: allowing shoppers to call through orders from 9am to 2pm for collection the following day; Exeter-based J&R Foodservice: supplying food and essential items to households across the South West; and London-based JJ Foodservice; who following the closure of restaurants and schools, has redeployed its workforce to supply food and drink to thousands of households.

Pre-coronavirus, we know that consumers were becoming more varied in the channels they used to shop, with our Omnichannel Tracker showing that over 85% of consumers who had purchased from a supermarket in the past week, also purchased from a convenience store, discounter, online retailer or an online food/drink delivery service (HIM MCA Omnichannel Tracker Q4, 2019).

To discover if there is a consumer appetite for the wholesale ‘channel’, this week we asked consumers if they were aware that wholesalers had started selling directly to consumers and if they would be interested in using this service.  Notably, we found that interest in using this type of service vastly outweighed awareness that is exists, with just 6% of consumers having used it, 26% aware of it and a whopping 54% of consumers offering an interest in it. 

These proportions varied greatly between demographics.  Usage was highest among younger and London-based consumers, with 13% of 25-34 year olds having already used it and one in ten Londoners. 

For wholesalers to make the most of the revenue stream that this new model offers, there must be strong consumer appetite where they operate.  Our data shows that key regions for a DTC model include London, Wales and the South.  In both Wales and the South, interest was 58%, almost three fifths of consumers.  Of all consumers in these regions, just 21% and 27% were aware that this offer exists, with 6% and 7% having already used the service.  These figures show of consumers who were aware of the service, there was a near one in three penetration rate.  London’s interest rate was in-line with the total at 54%, however it showed the highest usage rate with one in ten reporting to have used the service.

The current climate is likely to have exacerbated shopper demand for convenient, click-and-collect and delivery services, and so wholesalers should consider the opportunity to be had for operating DTC in the current period, whether or not it goes beyond the lockdown period and becomes an established RTM will remain to be seen. 

 

Insight reports featured in this article

UK Recovery Report 2020

Business implications for grocery and hospitality market stakeholders

 

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