The UK grocery wholesaling market is set to grow for years ahead, according to a highly positive report on the sector by leading research body IGD.
The market grew 1.9% last year to stand at £16.7bn, according to the annual Grocery Wholesaling report, down from a rate of 2.7% it reported for 2003. It predicted that the overall market would grow to £18.3bn by 2007 at a compound rate of 1.8% per year.
As in recent years delivered grew faster than cash and carry at 3.3% compared with 1.1%. However, cash and carry was still a lot larger than delivered, totalling £9.5bn compared with delivered’s £7.2bn.
Author of the report David Graham said a number of factors were to blame for the slowdown in growth. “There were long-term factors such as deflation in core categories, the competitive pressures on wholesalers’ customers from the major multiples and competitive attrition in the wholesale market.”
“There were also short-term factors such as the poor weather during the key summer season and the end of phone cards.”
The report found that cash and carries had a far greater proportion of foodservice customers compared with delivered, at 16% compared with 3% (the report excludes foodservice specialists such as 3663 and Brakes).
The study also investigated supplier attitudes towards wholesalers. “There was a tremendous level of support from suppliers,” said Graham. “We found that 88% continued to invest in the sector, and that 66% intended to invest more this year than last year.”
However, only 22% of suppliers said wholesale symbol groups delivered agreed store disciplines, down from 37% in 2003, and 63% said wholesalers did not feed back data to help with future planning.