May 12 2020

COVID-19: Wholesale Challenges, adaptation and the transition to Direct-to-Consumer Deliveries

COVID-19 disruptions, the Government-enforced quarantine and widespread closures of restaurants, pubs, and consumer quarters have undoubtedly changed routine and structure on personal, national and global levels.

Without the usual leisurely activities, both businesses and consumers are at a major loss in terms of social events and profits, which are having devastating effects on the UK’s independent businesses.

As always, changes which impact how industries, sectors, and consumers operate brings to light new possibilities.

The UK's public has shown a dramatic rise in the usage of home delivery services from both major supermarkets and local convenience stores.

Below displays the UK's levels of increased use of delivery service, and the additionally predicted rise, dependant on age demographics.

covid 19 home delivery statistics march


Surprisingly, older demographics were shown to have the lowest increase in usage, given the criteria for priority customers, however a contributing factor could be the lack of digital accessibility.

As for the hospitality sector, these changes mean the transition from the standard business model, which encourage customers into stores and restaurants, *has been flipped on its head. *

Businesses rely on providing their services, and the uncertainty surrounding when closures will end has to lead many businesses nationwide to proactively take their services to the customer.

Similarly to how UBER and Deliveroo operates, pubs and restaurants are opening their back-doors up to their locals, curving the impacts of complete closures while continuing their services as usual as they possibly can.

These changes, although temporarily sparked by such a phenomenon, beg the question as to how permanent changes may be implemented following the end of quarantine and forced closures.

Along with direct-to-consumer trends, retailers have seen a predictably large rise in pick-up deliveries, as well as more local businesses having to branch out and gather their products in bulk from a number of different suppliers.

These temporary practices have been adopted through necessity, but it does again lend itself to the idea that these changes may become permanent.

The more locally-operating businesses, whether that be a retailer who sources locally or a wholesaler who distributes local produce, have far easier lives currently due to the geography of their operations - Global Supply issues, such as UK wholesalers who largely depend on the resilience of global trade have seen far tougher times, and changes to their supply patterns are having a seismic impact.

An FWD survey recently revealed that a devastating one-third of Wholesalers will face enormous economic damage without Government support.

Furthermore, the BBC spoke with food wholesalers Metrow Foods; their Managing Director exposed the situation;

“All that we’re seeing out there in the freezers and the chillers is stock that is dead money effectively because it isn’t going out into the marketplace and returning revenue.”

With such huge losses, questions lie over how the Government will intervene and provide support to the Wholesale Industry moving forward.

For hospitality businesses, retailers and independant businesses, the longer these 'temporary' operational changes continue, it seems the less likely a return to more traditional practices will be.

We wrote another article seeing whether consumer and business behaviours, that have been adopted since COVID-19 closures began, will continue here.

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