Wholesalers are putting on a brave face in spite of a harsh trading environment and gloomy outlook.
Almost all (86%) of the leading wholesalers surveyed by The Grocer said that they were in a position to invest significantly in their businesses during 2006 and the same number said that they intended to do so.
However, they painted a bleak picture of the trading conditions they are likely to face in the coming year. Nearly three quarters (71%) said that they expected to see a speeding up of consolidation in the sector. Some 86% felt that spiralling costs, such as fuel, wages and red tape, which have crippled many wholesale operators this year, are set to have an even greater impact.
One wholesaler complained: “Costs are all still rising at above inflation while there is only downward pressure on price with no opportunity for passing on increased costs.” With the growing trend towards delivered wholesale, fuel costs caused the greatest concern. Half of those polled said that this would have the biggest impact on their business. Many were also worried by higher wages and increasing levels of red tape.
Another wholesaler said: “The government is introducing all these additional costs into a business that does not have the flexibility to generate the extra margin needed to cope with the increasing costs.”