As high street retailers struggle more than ever, and consumers battle with rising inflation, living costs and energy bills, businesses and civilians alike brace themselves to tighten their belts in the year ahead.

But with consumers buying fewer, or lower-cost items, and spending less on non-essential products, wholesalers are having to change their strategy and ensure that they adhere to the changing retail landscape.

What is the cost-of-living crisis?

The cost-of-living crisis relates to the accelerated increase in the price of day-to-day products and services in contrast to the average household earnings. 

Because the rapid rate of rising costs is far outweighing income growth, consumers’ money essentially goes down in value, meaning households struggle to afford basic, everyday items and fund their lifestyle. 

These rising costs have impacted the affordability of our energy bills, food, fuel, cars, and even mortgage payments, meaning consumers are having to make do with less after covering the very basics. 

And now, according to the BBC, the cost of living is increasing at almost its fastest rate in 40 years, mostly as a result of food and fossil fuel costs rising. With inflation already at 9.9%, prices are set to continue to rise well into 2023. 

The real issue comes when employers fail to increase wages to match inflation, which in most cases is inevitable as businesses suffer in the same vein. This means in real-term value, even if wages stay the same, salaries are falling as the price of simply surviving goes up. 

The demise of the high street 

We’ve been talking about the demise of the high street for years. But now, as consumer confidence has a serious impact on shopping habits and retailers report a significant decrease in footfall throughout UK cities, the imminent future for retail bosses looks pretty dire. 

As the average disposable income decreases for their customers, retail businesses will have to rethink their strategy. Ultimately, consumers are indulging less in the products they don’t need, focusing on the essentials, rather than the nice-to-have items, or impulse purchases that used to fill their shopping baskets. That means shop owners are having to overhaul their strategy, and their approach to their stock if they want to stay afloat during the recession. 

Why does the cost-of-living crisis impact wholesalers?  

The cost of living has a ripple effect throughout the entire supply chain. Ultimately, retailers are spending less to stay afloat, and that has a direct impact on the bottom line of the wholesalers that work with them. 

Consumers spending less means that high street stores are suffering, and in turn budget cuts and changes to stock on the retail side means the wholesalers who work with those stores are also heavily impacted. Many retailers are changing tack as consumers choose fewer luxury items, opting for lower-cost alternatives, and often, shopping around online for the best price. That means the high street stores are having to cut their margins more than ever to compete, stocking fewer items, and lower-cost items than before. 

Wholesalers are having to adapt to these new changing demands and continue to keep abreast of buying patterns. Many suppliers have had to amend their pricing and their product ranges in the past two years as the Covid-19 pandemic, and the war in Ukraine has played havoc with certain supplies. Having witnessed huge disruptions to supply and demand during the pandemic, wholesalers have also had to contend with Brexit, meaning they are having to roll with the punches of a hugely volatile market with availability and costs that can change drastically in a short space of time. All these recent socioeconomic challenges have meant many suppliers have had to change tack, and hike up their prices, leaving wholesalers struggling to forecast those that will be available, and afford those that will sell. 

How to manage in the months ahead 

Wholesalers and retailers will both need to work closely together to strategise and hone their data in the months ahead. Being able to notice patterns of upward or downward trends in purchasing, and which products are more popular could be a make-or-break situation for many businesses as the crisis continues. 

Get selective with your suppliers

Making sure you’re working with the right suppliers that provide the products consumers want and can give you a reasonable price is critical. It might be time to review your list of suppliers and go back to basics, making sure you’re working with your most important, flexible and loyal partners.

Plan ahead 

Now is the time for strategy. While it may seem hard to predict what will happen in such a volatile consumer market, having a plan in place will at least give your business a benchmark to help you regularly review, and adapt. For example, implementing more flexible contracts with suppliers, to allow for market fluctuation, could benefit both you as the wholesaler, as well as your suppliers and clients. Understanding disruptions in the supply chain, and how these will impact you and your retail customers will be critical in retaining an enduring relationship with those clients.

Use your data insights to help you prepare

Building a stronger strategy in the face of change requires accurate, reliable data. Without the right tools to give you the stats you need to assess purchase history and buying trends, it’s harder to manage risk and keep your business resilient. Alongside supply chain management systems, to help you understand disruptions in production, it’s wise to analyse the situation on the retail side as well. Sales analytics tools could help you ensure you can forecast as easily as possible, and stock the products that appeal to the end customer as household budgets continue to shrink. 

Toucan believes in always having access to all the right data. With Toucan’s sales analytics tool, specifically designed with wholesale teams in mind, your team will have access to visually displayed, comprehensive, and digestible data, whether you want to view your sales performance, that of a territory, customer, product, or product group. 

Toucan presents the key purchasing data and insights you need, so wholesalers can spot any warning signs and act upon those insights easily and quickly, as we try to adapt to a rapidly changing economic environment.

For more information on Toucan Sales Analytics, click here to request a demo.