The overwhelming majority of wholesalers are concerned by the tight profit margins available to the trade and, despite a slight improvement experienced by the companies that make up this year's Big 30 ranking, few believe this is set to improve any time soon.
As revealed in January, the average profit margin for the UK's 30 biggest wholesalers had inched up from 1.48% to 1.5%. Just under a third of the wholesalers who responded to our poll this week expect margins to become even tighter over the next 12 months. Though 70% of wholesalers disagree, the majority of the group feel that margins are likely to remain static at best. Indeed those who think their margins will remain unchanged or decrease made up 80% of the respondents surveyed.
Even those who think margins will stay the same say they will have to fight to ensure they do. "We hope to have steady margins over the next year as we negotiate better and buy better in terms of volume deals offered to us," one wholesaler claims.
Another says: "This is the best we can hope for - to remain static and improve things across the board by introducing new lines and looking for the odd opportunity to increase levels."
However, the battle to maintain margin has not entirely dented the trade's belief that wholesalers can still make more money. Sixty per cent say that despite these issues they still expect to increase the amount of profit they generate. "We can make more money if we are doing our jobs properly," says one cash & carry operator. "It just means we have to continue to work even harder at finding new areas to go for and, at the same time, keep our costs to a minimum."
Rising costs now seem to be the biggest issue facing the trade, with most wholesalers indicating that these will have a major impact on their businesses this year.
"We are in the middle of preparing next year's budget figure and are going to present a static profit forecast for the next 12 months to our board. The reasons - wage increases, fuel hikes, driver hours and energy costs," complains one delivered wholesaler. The sentiment is echoed by another wholesaler: "The impact of rising fuel costs and other government measures are having a direct impact on the profitability of companies in this sector."
However, some are just about bearing up. "This year, we hope to see an increase in our profitability as we increase our turnover," says one leading cash & carry operator. "The important thing for us is that we are able to contain any cost increases and maintain our margins, at least at the current level."