Many years back, if a customer wanted to purchase a food item, they have to go to many shops to buy whatever they need. For instance, a customer would usually visit a butcher to buy meat, a bakery for bread, a creamery for ice cream, and so on.
As the distribution networks evolved and became more superior, these services became more sophisticated in the sense that supply, buying, and delivery were centralized in a particular location or in a modern grocery store that is capable of stocking all the food products that buyers needed from a shop.
What does this mean to the average consumer: value delivery and saving of a great deal of time!
A popular adage has it that “change is constant”. The grocery store business is changing continuously to meet customer expectations and add value to their lives. What it means is that many Americans spend more time shopping, working and less time cooking. But this is not how it was in the last 75 years. More to this is the arrival of electronic commerce (eCommerce) which has changed the way people shop online. All these factors combine to shape the way and manner in which companies offer products and services that help to save the customer’s time in food preparation and shopping.
As of 2018, about 10 percent of U.S. consumers said they prefer shopping for groceries online. In aggregate, U.S. online grocery market grew from $12 billion in 2016 to 26 billion in 2018 and there is still room for more growth. The size of the total grocery market was put at $632 billion in 2018 and the online grocery sales are expected to hit $18 billion in 2020.
The big players in the grocery business such as Walmart and Kroger as well as new entrants like Amazon are all striving very hard to improve on their pickup and delivery strategies by using different strategies that suit their business size and capacity. Most of them have headed the online grocery store direction already.
These changes at both the wholesale and retail end are bringing about increasing economic effects on food distribution channels. Consumers can now ask for lower prices and prompt services. They have equally created room for increasing higher quality products and having the right product at the right time.
All of these transformations and positive growth combine to create a good business environment where margins and expectations for service are high, errors become minimal and adding value to the distribution process.
Wholesale Food and Beverage Distribution Model for Grocery Stores
Food products reach the tables of the final consumer after passing through a complex food supply chain that moves the products from the manufacturer to wholesale food distributors and grocery store locations from where they are taken to store shelves. This channel of distribution is best suited for a large inventory of shelves and packaged products.
One of the major characteristics of this kind of food distribution model is that it costs a lower amount to ship and store them. Apart from this, there are other advantages of packaged and shelf-stable food.
- They are less likely to spoil or damage during shipping.
- You don’t need expensive equipment to prevent wastages.
- They are easily distributed in large boxes, as much careful handling is not required.
However, food products that cannot be stored and handled through this model are easily distributed by another model. They are specialty items that are used in limited quantity or during seasons, of which they are not shelf-stable. In this case, such specialty products are distributed by specialty distributors who have invested in the equipment used for storage and ensure that the product is fresh.
Some of these distributors are wholesalers or growers who supplement their products with that of others. They deliver their products to wholesale distributors for grocery stores, grocery store warehouses, or other wholesalers who in turn distribute them to the stores and retailers.
There is another category of wholesale food distributors who supply food products that take up the space between the fresh produce and shelf-stable products. For instance, dairy food products, baked food, meats, and so on. These products, their shelf-life can be measured in weeks instead of days or months. They are distributed using a distribution model called Direct Store Delivery, as they are solved and delivered directly from the producer to grocery stores and retailers.
The customer end of the grocery business is changing and these changes are influenced by changes in customer lifestyles and need for variety at the lowest cost possible. The consumer of today is increasingly seeking ways to save time and money on their grocery expenses while the wholesale distributors for grocery stores are looking for a way to increase profit and add value to the customer. It is indeed a world of choice!