IGD column: This defining era demands rebalance

Wholesalers must change how they operate if they are to stay competitive, says Patrick Mitchell-Fox, Insight Partner, IGD

In 2026, the UK wholesale sector finds itself in a rare moment: stabilised after years of inflationary turbulence, yet still in the midst of structural change. While topline forecasts point to more moderate and steady growth, the shape of wholesaling is shifting faster than many operators can respond. Stabilisation is happening, but so is significant change and wholesalers must change how they operate if they are to stay competitive in the years ahead.

Price-sensitivity to stay

Although inflation has eased, the pressures it created have not. UK consumers continue to show high levels of value and price sensitivity.

This shift is structural rather than cyclical, and it impacts wholesalers directly as trading businesses and indirectly through the pressure on their business-to-business customers. Wholesalers that rely on passive volume growth risk falling behind. One of the strongest opportunities is to build propositions that explicitly support customer sales and business efficiency, helping them respond to their own trading challenges.

Efficiency demand

Delivery remains the dominant fulfilment mode, accounting for more than two-thirds of all wholesale customer purchasing, with electronic ordering (including online) firmly established as the largest purchasing platform. However, rising operating costs are putting pressure on margins, making the efficiency of picking, warehousing and distribution more critical than ever.

To stay competitive, wholesalers must focus on: n investing in technologies that increase efficiency in warehousing and delivery n ensuring picking and distribution operations run at optimum capacity n offering flexible service solutions – such as delivery windows and alternative collect options – where they add value.

This goes beyond basic cost control to safeguarding the service models that underpin both profitability and customer satisfaction.

Addressing the tobacco drag

The retail channel continues to face the biggest single drag on performance from the steep and ongoing decline of tobacco.

Expect this decline to continue due to falling consumption and high levels of illicit supply.

Although some product categories, such as ambient food and soft drinks, are achieving notable growth, no combination of categories is currently large enough to fully offset tobacco’s downward pull. Strengthening category strategy and optimising margin mix will, therefore, remain essential priorities.

Small but fast-growing

Professional business users remain the smallest part of the wholesale market, but IGD expects to see continued strong growth ahead of the sector average. A large share of professional business user purchasing still takes place in depot, and this group shows high participation in cash and carry, which despite long-term decline has remained resilient. For wholesalers, this group offers clear opportunities for incremental sales, diversification and growth in core food categories.

Building for tomorrow

The next phase of wholesale will be defined by the decisions wholesalers make now. The era ahead is not about waiting for conditions to improve but about strategic adaptation shaped by customer and consumer insight.

IGD serves as a unique, impartial force for good, driven by its charitable status and commitment to public benefit. Its purpose is to unite and inspire to deliver a thriving food system. It achieves this by acting as a trusted convener, uniting stakeholders from across the entire agrifood supply chain to address critical challenges.