Risks and opportunities in 2024 for wholesale

The run-up to 2024 does not make wholesalers optimistic. The lines of the graphs are downward when we look at sales growth, export expectations and business confidence. The number of bankruptcies, on the other hand, is increasing. That all is related to the general economic situation. The European economy continues to falter. Chances are that there will be a recession even until the summer, according to our Global Economic Outlook 2023-25. The likelihood is increasing that wholesalers will have to deal with important customers who fall over.

Geopolitical uncertainty
With their import and export activities, wholesalers are sensitive to international trading conditions like no other. In 2024 these are certainly not optimal. Geopolitical uncertainty is only increasing. In addition to the sources of war in Ukraine and Gaza, the many elections that are on the roll in Europe and also in the rest of the world create additional uncertainty.

Never before have so many elections coincided as in 2024. Much attention is paid to the presidential elections in the US, but there are also elections in India, China and Japan, for example. Elections to the European Parliament are taking place in the EU this year.

If we add up all countries where elections are held in 2024, it will be almost half of global GDP. In other words: the impact is great. Given the global legalization of politics, international trade is likely to face increasing protectionism (trade measures).

The 6 most important developments in the sector
1. Inflation and interest rates are falling
Positive elements for trade are the falling inflation and the fall in interest rates, which is expected to be implemented later in 2024. Perhaps consumers will get a little more space in their wallets and investments will be fueled. According to the Allianz trade research department, the policy rate in the eurozone at the end of 2024 will be 3.5% (end of 2023: 4%).

2. ICT and innovation
As a sector, wholesalers face numerous challenges, including staff scarcity, higher costs and the urgent need for climate and energy transition. Entrepreneurs are forced to adjust their strategy. Both large and small players have to work with sustainability and digitization in order to remain relevant.

New technologies and innovations play a crucial role in improving logistics processes, optimizing supply chains and increasing efficiency and effectiveness in the sector. It not only contributes to streamlining processes, reducing costs and improving customer satisfaction. This also strengthens cooperation and connectivity in the supply chain.

Innovations also ensure more sustainability. Companies that know how to handle this gain competitive advantage and can respond better to rapidly changing market demand.

With the use of digital stock management and on demand warehousing, (whether or not linked to a logistics partner or in-house logistics), the wholesaler can ensure faster delivery to the professional end customer. Depending on the products, distribution can take place daily, via delivery rounds or via personalized deliveries, but only if the amount of goods transported justifies this.

The quality of the logistics services of each wholesaler is an important distinguishing factor, even though the pure logistics service providers naturally also compete with them.

3. Sustainability and energy
The wholesaler does not manufacture products itself. As a result, the energy consumption of the sector is relatively low. Sustainability and limiting the environmental impact mainly focuses on the use of recyclable packaging (cardboard or paper instead of plastic) and the optimization of transport that mainly takes place by road. Logistical optimization is therefore at the heart of the wholesale economic model and contributes to energy performance.

4. Shortage of personnel
The wholesaler is a sector with very varied professions and a great need for labor. But like almost all other sectors, the wholesaler also has difficulty bringing in new people. Although the salary level is an advantage. This is higher, for example, than in retail. The sector mainly suffers from a shortage of delivery drivers, order pickers and forklift drivers.

5. Changing consumer behavior
Consumer behavior is constantly evolving and wholesale companies need to adapt to these new trends. The shift to online shopping, sustainability and ethical consumption are all factors that can influence the demand for certain products and services.

6. Increasing number of bankruptcies
Wholesalers are extra sensitive to cyclical developments. This explains why the number of bankruptcies in the sector is growing above average. Due to higher costs and the persistently weak economy, more and more companies are struggling with their liquidity and profitability. Higher interest rates and increased labor costs are ticking hard.
If important customers go bankrupt, this can also hit the wholesaler hard. Wholesalers who cooperate with governments are less at risk than fellow companies that do business with retail and SMEs.

Source: allianz-trade.com
Photo: Shutterstock

These uncertain times involve risks. A credit insurance offers protection against unpaid invoices. Contact the specialists of MODINT Credit & Finance and inquire about the possibilities. Mail to info@modintcredit.com or call +31 88 505 4700.

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