The wholesale food industry is faced with many new challenges as a result of the pandemic, most notably a decline in demand for goods as hotels, restaurants, schools and sporting venues operate at a lower capacity. As countries continue to battle the virus, consumer spending on food has not returned to prior-year levels as restaurants open, then close and partially open again. Some distributors have evolved their business models to supply retail grocers and many have turned to their data to examine every product line and determine whether it's profitable.
Shifting product lines to meet new demand
According to McKinsey Research four demand archetypes have emerged as a reaction to the pandemic:
- Pantry load and consume (consumption expands). Consumers stock up because of shortage fears or health considerations, causing an increase in consumption during and likely after the crisis. Goods in this archetype include cleaning supplies, vitamins, and supplements.
- Pantry load and preserve (consumption does not change). Individuals respond to fear of a shortage by initially purchasing more goods such as pet food and toilet paper. However, consumption does not actually increase during the crisis, resulting in post-crisis volume declines.
- Now at home (consumption shifts). Work-from-home and shelter-in-place policies force consumers to shift on-the-go occasions for products such as coffee and alcohol from in-person food-service outlets to online retailers. The result is increased consumption of these products during and potentially after the crisis.
- Not now (consumption declines). Declining consumer confidence and a focus on essential categories lead to a decrease in purchasing certain goods during the crisis—for example, beauty, food, and beverages for immediate use.
For wholesale food businesses, most fall within the archetype number four so for example, many distilleries and breweries have started to make hand sanitizer in partnership with local grocers.
Change sales channels
More consumers are buying online, so food wholesalers are also working with grocers to repackage goods to meet the retail standards and be included in this growing channel.
The grocery industry has historically seen relatively low online penetration, even though retailers and manufacturers have invested heavily in e-commerce channels. Many consumers have tried grocery delivery or click-and-collect for the first time. The result has been a significant surge in grocery e-commerce household penetration. This shift can potentially continue for the foreseeable future.
Offer discounts for products with short expiration dates
Because some products like dairy, meat, beer, baby food, and vitamins tend to expire more quickly than others, they are in danger of becoming dead stock if not monitored closely. To reduce the incidence of dead stock, use business intelligence to monitor your stock levels.
For foods that are approaching their expiration date, consider offering these products at a deep discount, even nearing the cost of goods. Moving the stock is better than having it end up in your dumpster. With Phocas, you can customize your dashboard to visualize the shelf life and quantity of perishables you have on hand to offer such discounts accordingly.
Customers will often purchase their products from wholesalers who offer the lowest prices with the fastest delivery times. However, it’s not always feasible to offer the lowest prices. That doesn’t mean your company can’t achieve a competitive edge.
With business intelligence like Phocas, your sales team can easily stay up-to-date on trends and costs. Phocas enables your team to identify which companies are buying one product, but not the complementary product. This creates opportunities for cross-selling. For example, your team may find that one company is buying pasta but not the sauce. With this information, your sales reps can offer a customer the chance to buy pasta and get the sauce for a discounted price.
When your team is able to segment these trends by regions, they can quickly detect whether a particular region is being targeted by a competitor. For example, Region A is ordering both hot dogs and buns, but Region B has stopped ordering hot dogs. This visibility allows your team to create responsive cross-selling offers on specific packaged deals.
For many food wholesalers, the key to success is having a quality tool like Phocas that can give your team complete visibility of your customer’s buying patterns.
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