Schools re-opening provides a welcome boost for the wholesale channel
So, the vaccination programme is on a roll and the kids go back to school on March 8. (You can almost hear the collective sigh of relief from the nation’s parents.) But what does this news mean for the wholesale channel, which has taken a bit of a hammering during the various lockdowns? SalesOut has the data to be able to answer that question.
In 2020, we saw a c.£110m drop off in sales by Schools within the wholesale channel compared to 2019 – a significant revenue loss from one of the core components of the Cost Sector business for many wholesalers.
Good reason for optimism
While it would be unrealistic to expect that all this drop-off will be clawed back in 2021, we do anticipate the majority of this value flowing back into the wholesale market as England’s children head back to school after many months of home schooling.
Compared with the previous year, 2020 also saw around.3,500 school customers either cease ordering from the wholesale sector altogether or satisfy their ordering requirements from other channels. However, considering the strong, personable relationships nurtured on a day-to-day basis between wholesalers and their customers, it’s reasonable to expect that most of these customers are likely to come back to the channel when schools once more offer full-time lunchtime dinner services.
SKUs down 4 percent
Schools in 2020 were obviously operating under very restrictive circumstances, compared to in a pre-Covid world. As a result, the number of different SKUs being purchased by school customers was down an average of 4 percent compared with 2019. Moving back to a ‘normal’ operating environment should definitely lead to a fuller range of products being purchased from wholesalers.
Based on 2020 performance, we would expect the biggest rebounds in terms of broader SKU purchasing to come in Confectionery, Crisps & Snacks and Cakes & Desserts. These were no doubt seen as ‘non-essential’ items when schools were only open for key worker children or where food provision was restricted for safety reasons.
At a regional level, the drop off in buying customers in the West Midlands, East Midlands
and the North West (some of the hardest hit regions in terms of COVID-19 infection rates throughout 2020) was more pronounced than other regions. Again, we anticipate that the level of bounce-back in customers buying from the wholesale channel in 2021 to be particularly strong in those areas.
But, a word of caution, we shouldn’t get too carried away. As the Prime Minster and his advisors have emphasised, everything on the Government’s road map is subject to change in the event of an unmanageable rise in the R rate. Any new lockdowns will make these optimistic predictions redundant. But, even having said that, it really does feel good to be able to report some good news for the wholesale channel for a change.