Helen Evans, Head of Communications CGMA, writes for Redfox News about the place for wholesale markets in the 21st century.
With the likes of Tesco moving towards Group Sourcing what place is there for wholesale markets in the 21st century?
Since the 1980s the rise of supermarkets has seen a decline in traditional wholesale markets.
Not only did they lose their biggest customers – the supermarkets – but they also lost many of their smaller customers as independent retailers struggled to compete on the high-street.
But 16 years after the Strathclyde Report predicted a dramatic downturn in numbers, wholesale markets are not only still with us but many have reinvented themselves and are actively looking to the future.
Manchester, Birmingham, Hull, Glasgow and London are all examples of markets that have redeveloped, or have plans to.
In total the UK’s 26 wholesale markets turnover some £4.1 billion – of which around half is fresh produce.
The total fresh produce sector is £8.34 billion meaning wholesale markets still have a substantial share. Reports of a wholesale demise are somewhat overstated.
So how have wholesalers adapted to the changes in the food supply chain?
In London the answer is that wholesalers have looked to the food service sector rather than retail for expansion. Given that half the UK’s restaurants are within the M25 this is not a surprising move.
The core offer of traditional, face to face wholesaling remains solid. But it is in the value added sector of wholesale distribution that the markets have reinvented themselves. No-where more so than at New Covent Garden Market (NCGM).
NCGM is home to some 200 SMEs and it supplies some 40% of the fruit and veg eaten outside the home in London.
The value added to this part of the supply chain is not just about delivery and logistics. It is also about knowledge, expertise and prepared produce – peeled, sliced, diced, juiced, pureed or even part-cooked sous vide.
Flow of Information
Wholesale markets are not just physical hubs or consolidation points which deliver both economic and logistical efficiencies – they are also about all important communications flows up and down the supply chain. They are about true partnership working.
It is this flow of information that adds as much value as the levels of customer service. The increase in demand for local produce provides a prime example of this.
Chefs may want more local gear but they still want more exotic varieties. So when a wholesaler suggests a grower plant cavolo nero rather than the more mundane brassicas, the grower gets higher return and the chef has a premium product with impeccable provenance.
As the middle man the wholesaler has not only delivered a product – he has delivered added value both up and down the supply chain.
At retail level, the rise of Farmers Markets shows that customers are increasingly interested in values as much as value.
The alternative channels of distribution may be smaller than the multiples but they are both more flexible and more able to deliver value.
Markets have been around since the dawn of time. They are able to adapt and thrive because they epitomise entrepreneurship at its most basic.
Their place in the 21st century is as valid as it ever was.
[source: Redfox News]
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