Markets have endured more than their fair share of difficulties over the last 20 years, with retailers across the world rapidly building market share and a huge amount of long-established wholesale and traditional retail businesses dropping out of the game altogether.
But today there are clear signs of a resurgence of interest in wholesale, with suppliers wising up to the fact that they are a lucrative alternative market to retail, and local and national governments acknowledging the vital role they can play in regional economies.
Since 2000, around €1.25 billion (£1.2bn) has been spent on wholesale markets in the EU, according to a recent survey by the World Union of Wholesale Markets (WUWM), and those cash injections show no signs of abating, with a raft of redevelopment and refurbishment initiatives at markets across the world unveiled in the last 12 months.
The sector was given a further fillip in October when the European Commissioner for agriculture and rural development, Mariann Fischer Boel, pledged her support for wholesale markets. Speaking to the WUWM congress in Copenhagen via video link-up, she said: “During my time as European agriculture commissioner, the future of the markets has been of major interest to me.” She claimed that wholesale could play a “crucial role” in the European fresh produce supply chain.
Graham Wallace, chairman of WUWM, believes that there is now a greater recognition at government level of the role that wholesale markets can play in the supply chain, and the sector is well and truly back in the public eye. “This is for two reasons,” he says. “First, wholesale markets have got much better at marketing themselves; and second, the economic crisis has seen a lot of focus switch to local produce and sustainable procurement, which markets are very good at.”
Wholesale markets today are much better at going out and reminding the world at large that they exist, insists Wallace. “The basic things that markets are doing have not changed, but we did fall off the radar for a number of years, especially as the multiples grew in terms of spending power. The wholesale sector let that happen.”
But the function of market management authorities has changed considerably in recent years, says Wallace, with the emphasis today including much more of a promotional role. “It is up to market management authorities to facilitate new opportunities and work with tenants,” he explains. “The two sides had almost become used to working against each other, but there has been a complete change on that in the last 10 years.”
Certainly in the UK, the support of celebrity chefs, increasing interest in local sourcing and procurement and the credit crunch have helped boost the profile of wholesale markets. Last year’s London Markets Month was backed by all six of the capital’s wholesale markets - Billingsgate, Borough, New Covent Garden, New Spitalfields, Smithfield and Western International - in a bid to raise their profile, and London Food, chaired by Rosie Boycott, has put markets at the heart of its strategy to help improve Londoners’ access to healthy, locally produced and affordable food.
South London’s New Covent Garden Market (NCGM), which was given the green light for an extensive redevelopment on its existing site in October, has reached out to chefs and growers in the last year with a campaign called Local to London, in a bid to boost the amount of local produce sold through the market.
Jan Lloyd, chief executive of Covent Garden Market Authority (CGMA), agrees that there has been a lot more talk in the news about wholesale recently. “There are several developments and restructures underway at wholesale markets and this makes it imperative for a market to take stock and move forward,” she says. “There is little statistical evidence of growth in wholesale, but people are re-focusing on the sector and we are seeing encouraging signs. However, the recession will impact and we need to be aware of that.”
Lloyd points out that there is increasing interest in food at grassroots level, with consumers buying locally and cooking more from scratch. “There is also a sense of dissatisfaction with the excessive demands of the retailers, and suppliers are realising that wholesalers are a good alternative market,” she says.
Lloyd believes that the update of NCGM will secure a long-term footing for the site, with both tenants and their customers assured that the market is in it for the long haul. The project will also have an impact locally. “This whole area from Vauxhall Cross to Battersea Power Station is an opportunity area within a development framework of the Greater London Authority,” she says. “Our redevelopment will be a key part of driving change locally.” The move will also secure the 2,800 jobs that the market currently provides, says Lloyd, as well as meeting the hygiene needs and best practice standards required of a modern wholesale site.
Around 30-40 years ago, markets such as NCGM relocated from their original city centre locations to more out-of-town sites, and that explains why so many wholesale markets, both in the UK and internationally, are now embarking on ambitious regeneration projects. In the UK, NCGM, Glasgow, Manchester and Birmingham are either rolling out or developing plans for an update, and in Europe, Copenhagen Market is being redeveloped at a new location, with a Danish consortium headed up by E Pihl & Son winning the invitation for tenders to develop the site in July. There are also projects underway at Prague’s wholesale market, and a new market recently opened for business in Italy. In Asia, the process has gone one step further, with the establishment of the new Shenzhen International Wholesale Market due in China in 2010 - a 30-hectare site supported by the Chinese State Development and Reform Commission.
Markets further afield are also redeveloping and looking at how to make the most of their inherent advantages. Sydney Markets Limited (SML) is a member of the Central Markets Association of Australia, which represents six markets throughout the country. SML incorporates Sydney Produce Market, Sydney Flower Market, Sydney Growers’ Market, Sydney’s Paddy’s Markets, Sydney Fresh Food Market and Sydney Swap & Sell Market.
SML embarked on a Master Plan in 2007 to review the sites’ needs - the plan identified operational efficiencies, and recent developments include: building of Providore units, after identifying the need for a new growing sector within the fruit and vegetable industry; building additional warehousing due to the need for greater space; creating a new truck entrance, to reduce truck movement on other roadways and implement efficiencies for truck loading and unloading; occupational health and safety procedures, with a focus on greater safety within the markets for all market users; and a review of value-adding opportunities, to identify additional product opportunities and areas for development and review best practice.
Gerry Daras, head of special projects for SML, says: “Together with the above, a Strategic Plan 2008-2013 was also formulated, to outline SML’s strategic direction for the five-year period. From that, four imperatives were formulated; to enhance the growth of our Paddy’s retail market and brand; to maximise the value and efficiency of the Sydney Markets property; to ensure the environmental sustainability of our site; and to grow the Sydney Markets business.”
There are two reasons for a resurgence of interest in wholesale, according to Daras. “First, there is healthy eating - a greater number of people are looking for healthier and fresher food offer as analternative to fast food. Second, there is greater variety wanted by more people of differing ethnic backgrounds.
“European markets such as Manchester and Barcelona have seen a reduction of wholesalers over the past number of years, whereas the Australian wholesale sector has been maintained,” continues Daras. “There is a greater emphasis on the hospitality, retail and catering channels (HORECA) in European markets - the Australian markets have also identified growth towards the HORECA channels and Sydney Markets has invested in providing purpose-built work areas for this Providoringsector.
“Similarities between the European and Australian wholesale sectors include the growers returning to the central market system from farm-gate sales to supermarkets, as well as strong and growing independent trade driven by market wholesalers.”
WUWM gave out its first set of awards at its Copenhagen congress last year, where SML scooped the prize for World Leader in Environmental Sustainability. Daras says: “This was the first time such an award was presented and it showcased Sydney Markets’ commitment to environmental sustainability and the Sydney Markets philosophy of ‘reduce, re-use and recycle’. The award also recognised the energy and water saving efficiency programmes that are in place that contribute to carbon emissions savings.”
At the same congress, the WUWM Community Support Award went to Garak Wholesale Market in Seoul, Korea, while the gong for Market Innovation went to Hamburg Wholesale Market. Torsten Berens, manager of the German market, tells FPJ: “Traditional market trading is still an important function of Hamburg wholesale market, of course, but we are systematically widening our activities as a logistics centre for companies that work with the organised retail food trade, for example. And as a third pillar of our business, we intend to open our doors to the public more often by organising events on the site of the wholesale market.
“Our experience of this has been very good; in the past three years, our food market event has attracted more than 30,000 visitors on each weekend. And in the context of urban development, we are also incorporating the site of the wholesale market into the new HafenCity district that is growing up around us. HafenCity is currently one of the biggest urban planning projects in the world. Last year, too, a school laboratory was set up on the site of the market, where pupils can carry out experiments on foods containing colorants and the like under the supervision of a specialist. And another of last year’s events here was the opening of the German Additives Museum; a tour of the museum offers interesting insights into the subject of additives in foods. Both of these institutions underline the importance of food safety and healthy nutrition.”
Berens explains that one major difference between the wholesale trades in the UK and in continental Europe is that the percentage of fruit and vegetables sold through the organised retail trade and discounters is much greater in the UK than in Germany. “I am thinking, in particular, of the increasing number of small outlets of food chains in central urban areas in the UK that are offering more and more convenience products,” he explains.
Part of the reason for this surge of interest in international wholesale stems from a sense of greater co-operation between wholesale markets, both nationally and internationally, and this will be crucial in keeping the momentum going in the next few years, says Wallace. Links exist both formally and informally at the moment - for example, there is a structured relationship between NCGM and Rungis, the Parisian food hub, and the latter has also created a partnership with Mercamadrid in Spain.
Covent Garden’s link-up with Rungis has given traders at the London site a “better understanding of the supply chain between the UK and France”, says Lloyd. The two market authorities have shared analysis on marketing and communication, and Rungis has advised CGMA on the best way to approach its redevelopment project. “We have tapped into the experience there,” says Lloyd. “Rungis is advising markets in Russia, China and India how to redevelop as well.
“We are now interested in making further contacts with wholesale markets across the world, as it shortens the learning curve for us, and we have already been in touch with Madrid, Barcelona and markets in Italy.”
Many countries operate their own wholesale market organisations, such as NABMA in the UK, the Association for the Promotion of the Interests of German Wholesale Markets (GFI), FFMIN in France and CAWA in China, and WUWM aims to pull the work of those groups under one global umbrella. WUWM has also established regional groups in Europe, the Americas and Asia-Pacific. “Ideas can be shared on a country-by-country basis and then brought together internationally via WUWM,” says Wallace. “I think some international markets can see what happened to wholesale in countries such as the UK, following the rise of the multiples, and they don’t want to see the same thing happen in their own countries or markets.”
Berens adds: “I think co-operation and a regular exchange of opinion between the various wholesale markets is essential for their future development. That is one of the reasons why Hamburg plays an active role in GFI and WUWM, where I am a member of the board of directors. Besides opportunities of learning from each other, we have created a platform that makes us much more able to uphold the interests of wholesale markets, for example in a political context.”
Daras agrees. “The co-operation between individual markets is very important, as it provides the sharing of information relevant to markets operation,” he says.
So what are the strengths that wholesale markets can push forward in these economically difficult times? “Global wholesale markets are all facing the same major challenge - the sheer strength in buying power of the big national and international distributors in foodservice and retail,” says Lloyd. “Traditionally, the focus of wholesale has been on price and volume. But wholesalers are a link in an alternative supply chain and they can now add value and service.”
What wholesalers can also offer over and above bigger businesses is the flexibility of a small operator, a huge wealth of knowledge and experience and the ability to rapidly change and adapt to market demands, says Lloyd. “Market operators also have their part to play in keeping costs down as far as possible for the tenants - improving credit control, offering different services and driving efficiencies, for example in terms of waste management. It is critical that CGMA does things like that - we want to make sure that the businesses in the redeveloped market are in as strong a position as they can be from the start.”
Berens believes that small and medium-sized businesses, especially, should pay more attention to good business management. “They should look for chances to specialise and pick up on trends - and in all cases respond more flexibly to the constantly changing demands of their customers,” he says.
Along with driving efficiencies, recruiting younger people to work in the industry will also be vital for the future. “Wholesalers really need to encourage younger generations to come into the market,” says Lloyd. “There is real concern that there are not the successors coming forward there used to be from within the family businesses.”
Long, anti-social hours and outside work can be offputting to youngsters, but Lloyd insists there are clear benefits to working in the trade. “If people get into working in markets they get into it in a big way - it gets into their blood. This sort of operation suits a certain individual, who maybe doesn’t enjoy a nine-to-five lifestyle and enjoys the cut and thrust of the trading environment. But how do we get that message across to the younger generation? We have got to encourage an understanding of the value of markets to the local economy and raise their profile.”
NCGM has already taken substantial steps to attract youngsters into the trade, with its Feeling Good, Eating Well schools project, which this year has been extended to cover a secondary school and a school for children suffering from visual impairment. “We are working to make children aware of the food they eat and how and where it is grown,” explains Lloyd.
Better representation of wholesale markets to regional and national governments is also crucial, says Wallace, and this has been especially successful in Europe, where authorities are starting to realise the economic benefits markets of all types can bring to an area.
The healthy eating drive has risen to the top of plenty of national governments’ agendas, with most countries now implementing initiatives to encourage greater consumption of fruit and veg. This is a particularly pertinent move for the wholesale scene, argues Wallace. “In alliance with retail markets, we can offer the three As - access, availability and affordability - and can reach parts of the market that others cannot reach, especially in certain countries where retail markets are extremely important to the food offer. The retail market sector internationally was not getting the recognition it should and we are just building it up again.”
Berens says: “The subject of nutrition and consumption of fresh foods and products from the region is gaining more significance again. It is bound up with a steadily increasing demand for organic products, too, and consumers are showing greater willingness to pay a reasonable price for good quality - assuming they can afford it - for themselves and their families.”
Creating greater links between wholesale markets and their retail counterparts can certainly contribute to a strong future for both parties, says Wallace. “In some countries, such as France and Spain, the links between wholesale and retail markets have always been well structured and they are recognised as being of national importance as food hubs,” he explains.
Lloyd adds: “Retail market managers need to understand what they have and they need to work with local authorities. There is an opportunity to remind people of the importance of wholesale to retail, and we need policy makers to remember markets when they are putting their policies together.”
It has long been assumed that more companies are dropping out of the wholesale sector than are setting up shop, but Wallace is clear that there are still opportunities for growth in the industry. He says: “There is certainly consolidation among the wholesale sector, but we are also finding new companies starting up. If a firm is progressive, outward-looking and finds a niche, they can still create new business.”
The recession is a concern to every wholesale business at the moment, says Wallace, and the catering side could especially suffer. “However, everyone needs to eat, so if you have to be in a business at the moment, this is as good as any,” he says. “Everyone in every industry has a big question mark hanging over their heads.”
Daras believes that people will return to the basic food offer during times of economic downturn. “There will also be constant, but reduced purchases from supermarkets and independents,” he says. “The impact of the recession is noticeable through industry credit service providers (Sydney Markets Credit Serviceis down 11 per cent) - however, the impact has not been as substantial as it has been on other industries, i.e. car manufacturing.”
Promoting the image of markets still further will be a case of getting out there and encouraging people to eat more fruit and vegetables, says Wallace, and this is where market management authorities can help. “At WUWM, we share ideas and that will be vital. Something we do have to emphasise is that we provide an opportunity for competition and choice for producers. As the financial squeeze bites we are an alternative - we just have to make that more visible. Market managers need to talk to their traders, who may not have the time or ability to promote themselves. At the moment, WUWM is discussing how to emphasise the fact that wholesale is an alternative marketplace. Re-educating consumers about local produce and how that keeps money in the local economy is also a logical step.”
Another key point for the future will be encouraging more inter-trading between markets in terms of import and export, says Wallace. “Why can’t we take small delegations of traders to different markets and facilitate business opportunities?” he asks. “It will not be easy but wholesalers are directly sourcing from abroad, so it can be done. Encouraging traders to find their niche and specialise will be important.”
In general, there is more of a buzz about the wholesale sector at the moment, believes Lloyd. “There is a lot more going on in markets than there was when I took this position three years ago,” she says. “We are seeing more discussion about wholesale and a higher profile for the sector, but we have got to think about the recession and see how that will impact this year.”
The fate of the sector will be self-determined, adds Wallace. “To be honest it is up to us - the future of wholesale is in our own hands,” he says. “We have got to hunt down the business, and wholesalers and market managers have got to work together and create opportunities. We have genuine advantages for suppliers and customers and we have got to emphasise that to encourage markets to move forward.”
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