What Is Wholesalers’ #1 Priority in 2024?
Brands have become more sophisticated in their digital practices, and are using their newfound knowledge to strategically drive growth in their retail accounts.
That’s the conclusion in NuOrder by Lightspeed’s annual Study of Wholesale, which found that brands are using digital tools to fuel their key priority in 2024 of doubling down on existing retail accounts, as well as finding new retail partnerships.
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In past years, the priority was centered on operational challenges, given post-COVID supply chain and inventory management issues. However, the adoption of technology solutions over the past five years and the rise of wholesale as their number one distribution channel has shifted the focus of brands.
The study found that wholesale continues to be the “most profitable investment channel” for brands, accounting for an average of 60 percent of total company sales. The business for brands are almost near evenly split between big-box retailers at 57 percent and specialty and boutique retailers at 45 percent.
On average, the 259 brands surveyed in the study plan to invest more in the next year in wholesale to fuel business growth over direct-to-consumer or e-commerce. But brands now say that the two big challenges are finding new retailers and improving the buying experience so they can sell deeper into their existing retail partners.
The need to find new retail partners has been fueled in part by the post-pandemic store closures in the outdoor and footwear space, as well as retailers buying more conservatively instead of upping their open-to-buy dollars. Brands are also looking at new lines to fill different niches in the market, as well as target new retail sources to sell into those channels.
The digital maturity of brands have them leveraging sales data and growth rates to optimize sales strategy and distribution. The top five types of data relied on to inform on the wholesale process include sell-through data at 62 percent, growth by account or retailer at 61 percent, sales trends reports at 60 percent, reorder or replenishment rate at 53 percent, and the average order value at 47 percent. And technology also has enabled brands to automate their marketing outreach to acquire more retail partnerships, as well as sell deeper into existing accounts. The study found a 7 percent increase from 2023 in the reliance on digital as the preferred method of communication.