FWD column June 2018: Andrew Selley
FWD Chairman explains why wholesalers are key in times of economic uncertainty and how they can take the lead as businesses feel the squeeze
It’s been a tough few months for both the hospitality and retail sectors, with the costs of doing business soaring and margins squeezed across the board. We’re already seeing the fallout from this, with national chains announcing full or partial closures: Jamie’s Italian, Carluccio’s, Byron and Prezzo among the restaurants; Maplin, Toys R Us and Marks and Spencer on the retail side. In grocery, there is currently a scramble for new partnerships to offset some of the cost increases with better purchasing power and avoiding the margin deficit by pushing the squeeze back to suppliers.
Business rates are indexed against Retail Price Inflation (RPI) and don’t take account of the success of a business or the performance of the economy. April’s business rates rises have hurt wholesalers’ customer base – at more than 3%, they are the highest for six years. The same month also saw another increase in the National Living Wage, this time to £7.83 for over 25s. The effect of this is felt most strongly in industries that rely on people to perform their service, such as catering and retail. April landed a third blow with an increase in contributions to workplace pensions.
FWD’s new research, to be launched later this month, estimates that its members support 537,000 jobs among its retail customer estate, and 650,000 in the catering and hospitality businesses they work with. That’s well over a million people earning a living, paying tax and spending their discretionary income in shops and restaurants, but for employers under pressure from rising costs, cutting headcount is often the first and only option. With Brexit potentially threatening the availability of casual and skilled labour, which increases the cost of recruiting and retaining staff, along with the impact of the Apprenticeship levy, it’s easy to see why the businesses are cautious about investment and expansion.
When FWD surveyed foodservice operators about their sources of information last year, there was a very clear preference among chefs and catering managers. Their first port of call for guidance – on legislation, product information and market trends – is nearly always wholesalers. And 80% told us that’s the relationship they value and the partner they are turning to, to help steer their business through the current turbulence.
As the wholesale sector’s future is entirely dependent on the health of our customers, this is the time to come to their aid. We need to continually increase the added value of our service to them. Help with cost savings, range reviews, menu development, sharing nutritional and allergen data, as well as insight on consumer trends, technical support, equipment sourcing, providing training resources, inspiring chefs, in-store theatre, tailored promotions, event and charity day support; these are as much a part of the wholesale distributor’s offer as price and availability.
Our Federation has a role, too, in raising the impact the cost rises impose on businesses. Our new research, The Whole Society, will reveal just how important our sector is to both the economy and the social structure of the UK, and impress on policy makers how reliant the country is on wholesale distribution and the dynamic, diverse, job-creating businesses it supplies and supports.