COVID-19 forces wholesalers to venture into retail, says GlobalData

The prolonged global lockdown caused by the COVID-19 pandemic has hit many businesses, including food wholesalers supplying foodservice operators and virtually eliminating sales through these channels for wholesalers. Therefore, it is extremely important for them to look for alternative revenue streams amidst COVID-19 uncertainties surrounding their clients’ operations. The constant challenge of meeting operational expenses and mounting inventory pressures have made it imperative to reconsider business models and reassess the future. New business operation models can help wholesalers mitigate losses and can open up new business avenues in the retail sector post-crisis, says GlobalData, a leading data and analytics company.

For instance, Service foods, a wholesale grocery supplier in New Zealand, faced this problem as demand from hotels and restaurants dropped due to the lockdown. The business was forced to adapt its supply chain and operating model and started serving domestic customers directly, eliminating the threat of a total business wipe out. Similarly, another food wholesaler Bidfood New Zealand started food essentials delivery services for retail customers through its new ‘Bidfood home’ services.

Wholesalers with a vast distribution network and a strong digital platform for sales and service support have started selling to consumers directly. JJ Foodservice, a UK-based food and drink wholesaler, acquired 35,000 new consumers within a few weeks of starting its direct selling services.

FoodByUs, an Australian start-up, made the switch from B2B to B2C and has developed a program to transform local restaurants into mini convenience stores stocked up with essential products for local communities helping their existing clients and acquiring new retail consumers under the new arrangement.

Hrishabh Kashyap, Retail Analyst at GlobalData, comments: “The retail sector is largely reliant on consumer confidence and customers being able to leave their homes. Both these factors have been badly impacted by the on-going crisis. Thus, no matter how well established a retailer/ wholesaler is, it must relook at how to manage and operate its business. Measures must be taken to ensure continuous cash flows to sustain financial losses. It is extremely important to check the feasibility of existing business models and strategy planning for the short to long-term considering all possible scenarios, however remote they might appear initially.”

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