Following the announcement that the UK's largest delivered wholesaler Palmer & Harvey is now in administration, PwC, the administrators, have advised the company's customers that it cannot provide any further wholesale service and that even orders placed before the administration cannot now be honoured. Therefore customers "will need to arrange an alternative source of supply going forward." With sales of £4.4bn from a customer base numbering up to 90,000 retailers and institutions, the resulting redistribution of business-to-business supply is perhaps one of the biggest short-term upheavals ever seen in the UK wholesaling sector, and as such the opportunities for other wholesalers are considerable.
Not all the £4.4bn likely to be 'wholesale accessible'
Amongst Palmer & Harvey's broad customer base is included multiple grocery retailers such as Tesco and Sainsbury's using it mainly as an outsourced specialist distributor of tobacco. Accounting for an estimated 60% of total company sales it seems likely that this element of the business can be quickly diverted through in the in-house supply chain/logistic functions of these very big customers, and thus the opportunity for wholesale competitors will be limited here. However, in contrast those many smaller customers without their own supply chain resources will be looking to third party wholesale/distribution sources to fill the gap. As well as many small scale retailers (with only one or a handful of stores), this category of P&H customers does include some significant, even national, store operators such as McColl's, Esso, Shell and forecourt dealership MRH, and is worth up to £1.7bn on an annual basis.
Booker, Nisa and SPAR: key players in the delivery space
The obvious businesses for larger retailers, needing well-organised multi-site service, to turn to are Booker (in particular the Booker Retail Partners division), Nisa and SPAR all of which operate national delivered wholesale services, and all of which specialise in supplying convenience stores. However, the scope that these wholesalers have for taking on significant new customer accounts at short notice is unclear. Typically when new accounts are activated there is a gradual roll-out process with stores switching into the new supply network in manageable batches, a luxury not available in the current circumstances. Thus while we will see these delivered wholesalers taking on former national account customers of P&H in due course (and of course Morrisons in the case of McColls), in the short term we are likely to see a wide range of ad hoc, short-term contingencies being put into place.
Key cash & carry players to benefit in the short term
The simplest short-term contingency for any smaller retailer will be to turn to cash & carry wholesalers, allowing ready access to stock by collecting it for themselves. In these current circumstances with distribution arrangements needing time to set up (if only to establish credit facilities), even larger retailers are likely to be dealing with Booker, Bestway and Dhamecha (plus many others) on a cash & carry basis in the next few weeks. National symbol group Costcutter, including some 2,200 stores has already sought to register all its retailers with local cash & carry depots to ensure access to stock over the coming weeks. Meanwhile the wholesale buying group Today's has advertised to P&H customers that it is working with suppliers "to ensure upweighted stock holdings and key pricing on critical items in order for independent businesses to be confident in making their local Today's Group member wholesalers (which includes Dhamecha) first choice to support this change."