Wholesale is responding with speed and agility on a scale never seen before, and we should be incredibly proud of our colleagues right across the sector. Collaboration on stock share, people share, vehicles and best practice has shone through this week, alongside amazing stories of goodwill, innovation and community spirit.
We welcome the government focus and progress this week with the definition of key workers including the food industry, and legislative flexibility.
Th announcement on Friday evening on the ordered closure of key outlets, while expected and understood, is still a devastating economic blow for a significant number of our members, their customers and other wholesalers across the sector.
It has been pleasing to see the announcement on the Coronavirus job retention scheme and the deferral of VAT, both of which now need scrutiny.
But, while we recognise the extremely difficult job government has, and the huge investment it is making, we must still help the government understand that ‘business is not just business’. There must be some recognition of the essential role played by wholesalers as a vital link in food distribution.
This will mean recognising a relatively unique economic model. The Coronavirus job retention scheme is a positive move, but the cost base for wholesalers is not simply its people but complex structures including IT, warehouses, refrigeration, vehicles, etc, which makes it very different to other business models.
A wholesaler that turns over £20m per year may only make a net profit of £200k annually due to its high overheads made up of many things other than payroll. At the same time in other sectors, businesses exist that perhaps turn over £1m but make the same £200k profit through a much lower turnover and lower overhead structure that may all be people based. In this circumstance, even with the support on wages, when ‘sales stop’ for both companies it will take significantly longer for a wholesaler to pay back any loans needed from future profit versus the much smaller business. Some may simply not be able to do it.
The business interruption loan being extended to 12 months interest free is positive but it is still unclear who is eligible, and we must get understanding of the above situation and push for grants for our exceptional industry which performs such a critical role.
I absolutely respect that everyone is asking for help but the wholesale sector needs clarity and prioritisation from government with a special focus and additional support especially for foodservice and on-trade wholesalers where demand is now stopping but costs are not.
We still need grants, not loans, and we need them now.