Experts predict year of wholesale consolidation, collapse and new rivals

Five industry experts have predicted further takeovers, major new entrants and company collapses in the wholesale sector in 2020.

Cotswold Fayre, the Federation of Wholesale Distributors, Him, Store Excel and The Wholesale Company all predicted significant disruption to the channel next year. Multiples looking to get into the convenience sector were listed as the most likely parties to acquire existing wholesalers, while margin squeeze and high debts owed by retailers are the predicted causes of wholesaler collapses during the next 12 months.

Paul Hargreaves, chief executive of premium and speciality wholesaler Cotswold Fayre, said wholesalers are being squeezed from both suppliers and retailers.  “I expect more business casualties in 2020,” he concluded.

Val Kirillovs, research and insight director at analyst Him, said wholesale “is getting crowded”. He explained: “Big players such as Tesco, Morrisons, Asda and Amazon have demonstrated their intent to tap into the opportunities that wholesale offers.”

Read more: 150 new Tesco Express stores to open

The Wholesale Company’s managing director, Tanya Pepin, described convenience wholesalers as “ripe for disruption”, adding: “Further forays by the multiples into wholesaling is quite likely…  Greater market consolidation is inevitable – with acquisitions from private equity, the retail multiples or large wholesalers.”

Wholesale consultant and former Bestway operations director David Gilroy said convenience stores are “over supplied” and there are “a number of weak, vulnerable [wholesale] players”. He said this was due to stress from “low profitability, high customer debts and new entrants”. “I think we can expect some closures and consolidation,” he said.

The predictions come from a survey of 17 wholesale industry leaders by Better Wholesaling. Asked what changes they expected in the next 12 months, 59% said greater online ordering tools from wholesalers for customers, 47% said more environmental improvements, and 41% revealed plans to introduce and promote vegan goods.

Environmental improvements and predictions that would affect stores include rerouting of deliveries, reductions in suppliers offering drop shipments and more plastic-free packaging. Several respondents also predicted that stores will receive greater support from their wholesaler’s catering divisions. 

Bestway Wholesale managing director Dawood Pervez said: “The lines between retail and foodservice will continue to blur, particularly through the continued rise of food to go and street food. We develop our range to keep on top of trends, incorporating ‘fashionable’ ingredients that support foodservice and retail.”