Our concerns mainly relate to the branded market, where the multiples continue to apply extreme pressure. A wholesaler needs to provide two margins - one for itself and one for the retailer - whereas a multiple requires one for itself. The result is pricing that make things difficult for the independent market. The situation is much better away from the core branded market and this is where independent retailers can make much bigger profit margins. We advise our customers to look at product ranges that are not the focus of the supermarkets as sales have proved higher and margins much stronger. We are developing and launching new, exclusive products that can reward the retailer with a strong profit. We have to back this up with excellent service and industry knowledge that our customers rely on.
Costs aren't covered Delivered wholesaler
?Profit margins have always been tight in wholesale but suppliers, particularly those in traditionally important sectors, need to work closely with wholesalers to address this. Cigarette manufacturers need to realise the importance of the delivered trade, which is working on gross margins of about 1%. One major supplier has stripped the wholesale industry of any budget stock profit. It is taking this for itself, which is where the profit was made for wholesalers. At the same time, chocolate margins cannot give enough profit at a shared margin of 23% to cover all the costs of wholesale and retail when the rising costs of transport and staff are factored in. As far as we can see margins are unlikely to get any better, remaining roughly the same. With costs rising this is likely to affect our profitability.
Rates are going up Cash & carry operator
?Competition is always getting harder, even with other wholesalers. In order to compete with other operators, we often have to sell at cost. My feeling is that unfortunately this is going to get worse. Last year we had the World Cup and the weather during the summer was good, which created a feelgood factor. This is not the case at the moment because everything is going up - interest rates, council tax, gas and electricity. We have to compete with the supermarkets all the time on price, but with these smaller stores it is really affecting our customers as they now have a choice between an independent and a supermarket-run store. Too often they will choose the supermarket store because of the way the store looks and the freshness of the produce they can offer. So it will be tough for us to increase profits this year.