Delivery fee debate: Wholesalers struggle with increased costs; Booker assures exceptional service
A worker delivers goods from a lorry that is advertising driving and warehouse vacancies to a business in Leicester Square in London on October 13, 2021. - A shortfall in HGV drivers has sparked fuel shortages and fears of empty shelves in supermarkets over Christmas. (Photo by JUSTIN TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)
Food and drink wholesalers have admitted to be reeling under increased cost pressure but not all have plans to implement new charges to delivery services. On other hand, Booker, the one which is set to charge a delivery fee from Feb 28, has assured retailers that they will be rewarded back in the form of overall excellent services.
Booker’s recent announcement of imposing an almost £30 delivery fee has certainly not gone down well with retailers who are calling on the wholesaler giant for breaking their backs at a time when they are dealing with already high costs.
The wholesaler’s RDMs have begun verbally communicating the changes to retailers which is set to come into effect from Feb 28, with letters due to be sent to stores. As per a public statement by Booker spokesperson, the wholesaler is “forced to take this difficult decision due to rising costs”.
Noteworthy here is that Booker is not the only wholesaler who is hitting retailers with a new delivery fee. Nisa retailers are also being imposed with a £4.88 “fuel levy” per delivery.
With rising labour cost, lack of HGV drivers and hence higher wages, higher energy costs, grocery wholesalers are clearly dealing with cost pressure from all sides- something which Booker and Nisa are seemingly trying to dissipate and pass on to their customers.
No way out
James Bielby from Federation of Wholesale Developers (FWD) acknowledges that the wholesalers have been dealing with increased cost pressure for a while now.
“Like every other part of the food distribution network from farms to stores, wholesalers have been affected by the unforeseeable events of the last two years and they are facing huge increases in the cost of keeping their customers’ shelves stocked,” Bielby told Asian Trader.
Shortages of drivers have been in the headlines over the past months with empty shelves showing the impact of what the Road Haulage Association (RHA) called a "perfect storm" of problems. Not to forget that a rise in online shopping has resulted in more driving jobs which require a van rather than a HGV which is seen as a better option for some.
To meet the driver’s scarcity, firms are left with no choice but to increase wages, as high as 40 percent in some cases. In fact, research from job site Indeed shows salaries for driving jobs have surged more than seven times faster than the average wage growth recorded for all jobs in the UK.
Back in December, a dispute involving drivers employed at Booker Thamesmead site had flared up to the extent that it led to possibility of strike during the festive time, threatening the deliveries to 1,500 convenience stores in London and the southeast. The strike was called off on Dec 20 after Booker management reportedly agreed for an “in-depth review of pay”.
Clearly, Booker was dealing with the rise in drivers’ wages for some time.
Photo by ADRIAN DENNIS/AFP via Getty Images
Bielby from FWD admits that wholesalers have had to respond to the wage increases offered elsewhere.
“The shortage of HGV drivers has meant wholesalers have had to respond to the wage increases offered elsewhere,” he said.
Apart from drivers’ wages, the firms are also dealing with higher costs from all sides.
“Labour shortages throughout the whole supply chain are driving wage increases, along with rises in the National Living Wage. On top of that, the soaring price of oil and gas has huge implications for a sector that requires enormous amounts of electricity for refrigeration, heating and lighting, and fuel for delivery vehicles,” Bielby said, adding that wholesalers lost a huge proportion of their customer base for several months during 2020-21, and “didn’t get the government financial support offered to supermarkets, so they don’t have the reserves to absorb such steep increases”.
Booker is yet to respond to our queries.
Industry Responds
Declaring that the firm has been struggling with a myriad of cost-related issues, wholesaler giant Bestway echoed Booker’s public statement that the past two years had been “demanding”.
“It’s fair to say that the past two years have been demanding. We have seen record-high fuel prices, wage cost increases, increases and disruption across the supply chain and sector-wide labour shortages,” Bestway spokesperson told Asian Trader.
With rising costs, some retailers feel that Booker’s move will be imitated in some form or the other by other wholesalers very soon.
Bestway, however, strongly denies the claims and has assured retailers that they have no such plans in near future.
“A key priority for our business has always been our commitment to supporting independent retailers, who played such a vital role in supplying the public with everyday essentials during the pandemic. As part of this commitment, we do our utmost to ensure that the costs we face are not passed on to our customers," Bestway spokesperson said.
Aside from its standard delivery service (for which Bestway does not charge any fee but a minimum order delivery surcharge), Bestway vans fleet supplies retailers with free deliveries with no minimum order requirements, providing retailers with top-ups of key categories in between their larger shopping missions.
“We are focused on driving efficiency to counter increased inflationary pressures and have no intentions of implementing new charges to our delivery services in the near future,” Bestway spokesperson told Asian Trader, adding that the firm is committed to “offer the market’s leading service to independent retailers” despite being faced by the same economic uncertainties.
Parfetts too has assured that it will not impose any delivery charge in the near future.
“At Parfetts we are focused on delivering great value and service to our retailers. We are aware others in the sector have increased the cost of delivery and we can only say that we have no intention of imposing delivery charges,” Steve Moore, head of retail at Parfetts, told Asian Trader.
Parfetts’s minimum order is £750 and there is no additional charge for delivery.
“We are constantly working with retailers to understand how we can provide the best service and great value. Our retailers also enjoy access to regular promotions,” Moore said, however, admitting that the sector is undoubtedly facing increased pressure on costs.
“As an employee-owned business we have the flexibility to give our retailers the service they need to operate profitably,” he said.
FWD, however, chose to make no such claims on behalf of its members. The wholesalers' body believes that each firm will have their own way to tackle the cost increases, some of which will end up being passed on to the customers.
“With food price inflation expected to top 6 percent this year, there’s no question that some of these cost increases will be passed all the way through to consumers.
"Each wholesaler will be having conversations with their customers about how to structure this” Bielby said, assuring that FWD will keep the government informed on the effect this price inflation has on wholesalers and their customers.
Booker's assurance
Meanwhile, Booker reported to have assured agitated retailers that delivery charges will be rewarded back in good service.
In a recently-held meeting between Booker RDM and Manchester-based Premier retailer Mos Patel, the latter revealed how he was assured a promise of exceptionally-good service and on-time delivery.
“Stock availability is going to be there. The service is going to be improved. They are going to keep the prices low as well. They said they will be investing more in call centres and the depots are going to be improved drastically,” Patel told Asian Trader.
Patel, who used to avail five deliveries a week for his two stores, is now contemplating to cut it down to two per week and get the rest from Parfetts (which he also claims is the cheapest) and other local suppliers. However, he has not given up on Booker yet.
“The thing with Booker is they think ahead compared to any other suppliers and wholesalers. They work closely with us. They give ideas and suggestions. They are always there- even in the times of Covid, they were consistent,” Patel said.
Booker, Patel said, knows and admits that retailers will demand excellent service because now they are paying a good amount for it.
Retailers should prepare for late rush of shoppers looking for fresh food, centre pieces for the dinner table and last-minute gifts, suggests experts forecasting that grocery spend is set to hit £10 billion in the two weeks leading up to Dec 21 with £6bn being spent at the grocery multiples
According to new data released NIQ today (11), total till sales growth steadied at UK supermarkets (+3.7 per cent) in the last four weeks ending Nov 30 2024, down from 4.0 per cent in the previous month. This slowdown in growth is likely due to milder weather, Black Friday distraction and shoppers holding out until early December for the big Christmas shop.
NIQ data also reveals with shoppers actively looking for discounts, over the last four weeks there was a boost to visits to stores (+5.7 per cent) ahead of online shopping occasions (+0.6 per cent). As a result online share of FMCG was at +13.1 per cent compared to last year +13.4 per cent.
Savvy shoppers capitalise on promotions
The percentage of sales purchased on promotion increased to 25 per cent from 24 per cent in October. Shoppers are seeking out savvy ways to save money and retailers and brands are hoping to drive incremental sales and basket spend through both more in-store promotional activity and increased loyalty app discounts.
"Personalised Savings" is thought to have unlocked this discretionary spend with 38 per cent of households set to use vouchers and points saved up for their Christmas groceries this year.
Black Friday also coincided with payday at the end of the month, seeing value growth sustained at the Grocery Multiples in the last week of November. Shoppers cashed in on higher ticket priced items while on promotion, such as 25 per cent off six bottles of wine and beauty and gifting offers.
However, this likely resulted in holding back spend on other items such as storage cupboard food, frozen and household basics where growth was flat.
Health and beauty wins out
In terms of category growth, NIQ data shows that the Health & Beauty category experienced an uplift in sales (+6.9 per cent), likely helped by Black Friday discounts. However, beer, wines and spirits (BWS) continue to struggle as value sales fell (-3.8 per cent) and there was no corresponding increase in unit sales (-2.5 per cent) compared to a year ago.
Looking ahead to Christmas celebrations with family, NIQ data reveals that 50 per cent of shoppers still expect to dine with turkey while 22 per cent opt for chicken, with beef following at 20 per cent. And 12 per cent opting for vegetarian or vegan alternatives.
Mike Watkins, NIQ’s UK Head of Retailer and Business Insight, said: “Sales are going to accelerate in the two weeks up to the 21st December. The biggest single week will be week ending 21st December with £6bn being spent at the grocery multiples, which is a third of the 4 weekly spend in one week.
"Food retailers can prepare for this late rush starting next week as shoppers will be looking for fresh food, centre pieces for the dinner table and last-minute gifts, including a trade up to premium items”.
Watkins adds: “Last year with food inflation at 7 per cent (BRC NIQ SPI), volumes fell in December 2023 however, this year NIQ expects volume growth of around +1 per cent.
"Even with 50 per cent of households saying it is important for them to make savings on their Christmas groceries this year, 66% still expect they will spend the same or more than last year (NIQ Homescan Survey) and 38 per cent intend to use points or vouchers saved up. So there are reasons to be cheerful”.
More than two in five UK retail employees (43 per cent) were at risk of quitting their jobs between July and September this year, an 11 per cent increase from the previous three months of 2024, according to the Retail Trust and AlixPartners’ latest Retail People Index.
The index, which surveyed 1,100 UK retail employees in July, August and September, found the percentage of people working whilst physically or mentally unwell, also increased to 41 per cent over this time. This is a 14 per cent year-on-year increase, and a 7 per cent rise from the previous quarter of 2024.
Younger retail workers, aged 19 to 24, and LGBTQ+ employees had the biggest ‘flight risk’, or propensity to quit, of 47 per cent, due to feeling more anxious and depressed about work and also least likely to feel they were recognised for doing something well.
Retail employees aged 19 to 34 showed the highest levels of presenteeism, where employees work when physically or mentally unwell, with half working while unwell.
And female workers experienced some of the biggest mental health declines over the period, with an overall wellbeing score drop from 72 per cent in July to 52 per cent in September for women aged 55 to 64. Those aged 25 to 34 also experienced lower wellbeing in July and September.
Staff were asked, by the Retail Trust’s and employee engagement platform WorkL’s online happiness assessment, about their mental and physical health and how valued and fulfilled they feel, to create an overall wellbeing score for the Retail People Index.
Questions around pay, recognition, relationships with managers, work-related anxiety and workplace safety were among those used to separately help calculate the likelihood of them leaving their jobs or working while unwell between July and September 2024.
Chris Brook-Carter, chief executive of the Retail Trust, said, “There are often unrealistic expectations that the summer will be a less stressful time for people working in retail, but the reality is it often brings added pressures for working parents and those having to put in extra shifts to cover colleagues’ holidays.
“That's why it's important employers don’t underestimate the support their staff members need during the summer months, especially as they'll need a happy and healthy workforce to rely on as they gear up for the busy shopping period at the end of the year.
“Investing in staff wellbeing and retention during this crucial period will allow retailers to be more productive and successful for the rest of the year, thanks to the fundamental link between the hope, health and happiness of a business’s workforce and its economic resilience.
“Thank you to AlixPartners and to our data partner WorkL for their support in creating this valuable index. Our hope is that businesses from across the retail sector and beyond can now build this insight into their wellbeing strategies as they look to the tailored support their people will need in 2025.”
Laura Bond, director at AlixPartners said, “Retail employees clearly feel increasingly unsettled. These year-on-year insights underscore the uncertainty felt across the industry – and the autumn Budget likely will have heightened tensions further as people brace for potential job cuts and role shifts in 2025.
“As retail leaders respond to the Budget, they have an opportunity and responsibility to step up and engage meaningfully with their teams. Supporting people through this period isn't just the right thing to do – it’s a key driver of business performance.
“High-performing retailers consistently demonstrate effective employee engagement and a commitment to advancing diversity and inclusion. These are critical strategies for navigating challenges, while fostering resilience and growth within the organisation.”
The government has made significant changes to the law in recent years to further push the UK towards becoming a smoke free country. Most notably, the government's "smoke-free generation" plan aims to create a generation that will never be able to legally buy tobacco products. Local authorities across the UK also deliver a wide range of services to help smokers to quit. Despite these efforts, around six million people in the UK are still smoking and it’s costing local authorities on average £936 to help a smoker to successfully quit.
The research, compiled by Haypp, looked at how much local authorities are spending on stop smoking services, vs the number of successful quitters. Based on current figures, it would cost local authorities a total of £5.61 billion to help every smoker in the UK to successfully quit.
With so much funding going towards quit-smoking services, it’s interesting to note that 57 per cent of people who have set a quitting date have successfully quit smoking in 2024. Men are more likely to be successful quitters, with 59 per cent of men who were trying to quit at the start of the year reporting that they have kicked the habit, compared to 56 per cent for females.
Stop- smoking services are provided by local councils, with each location offering a variety of services. On average, each council in England is spending £139,366 per year on quit smoking services which ranges from group support and one to one coaching, to free nicotine replacement patches and vape kits.
The data which can be viewed on an interactive map, view England quit smoking rates here, displays all of the areas around England based on the success rate for quitting smoking, as well as government expenditure and cessation tools. Overall, North Yorkshire had the highest quit smoking rate at 82 per cent, and Hartlepool reported the lowest quit smoking rate at just 13 per cent.
Additionally, the amount each council invested into stop smoking strategies and services varied considerably, with some councils investing much more than others in the effort to help people successfully quit. The councils currently spending the most per quitter, are:
1.Westminster – £6567
2.Ealing – £4771
3.Gloucestershire – £4043
4.Manchester – £3171
5.Telford and Wrekin – £3085
Quitting smoking strategies vary across the councils, but one highly successful method is encouraging smokers to switch to a less harmful nicotine product. In England, 58 per cent of people successfully quit using a nicotine replacement therapy product, such as nicotine pouches, and 63 per cent successfully quit using tobacco-free nicotine vapes as a quitting tool.
“Following UK government guidance, those who reduce the amount they smoke are more likely to stop smoking eventually," said Markus Lindblad, from Haypp. "The national harm reduction strategy, including switching to alternative, less harmful nicotine products, such as nicotine pouches, has been key to the UK being one of the most successful countries in Europe in reducing the number of smokers overall. While it comes with a high price tag, the UK has been very successful so far, and the investment is worth it.
“There are also several other possible contributing factors to these success rates, including local councils offering nicotine replacement therapy, free vape starter kits, online courses, and in person, one-to-one or group, support. All of these methods are excellent resources to help people quit smoking for good.”
The research, conducted during summer 2024, explores how rising living costs are impacting consumer spending habits. Among its findings, 43 per cent of consumers reported abandoning a purchase this year because their preferred payment method wasn’t available. Security also emerged as a key concern, with 54 per cent of respondents citing it as a critical factor in payment decisions. Nearly half (47 per cent) expressed discomfort entering financial details online due to security concerns. These concerns are further compounded by the increasing prevalence of cyberattacks, with 50 per cent of businesses reporting such incidents in the past year.
“Consumers have made it clear that payment choice and access to cash are essential to them," said Mike Severs, Sales & Marketing Director at Volumatic. "While digital payments are convenient for many, cash continues to offer unmatched security, privacy, and inclusivity. As cyberattacks become more frequent, it’s no surprise that consumers value the reliability and resilience of cash.”
The survey also shed light on consumer unease about a cashless society with 63 per cent expressing concern about losing access to cash, which the UK government has addressed through the new Financial Conduct Authority (FCA) rules introduced in September. Many consumers still prefer traditional payment methods, with 44 per cent indicating they would like to reserve goods online and pay in cash upon collection in-store. Additionally, 35 per cent feel uncomfortable leaving home without cash or a physical payment card.
Volumatic highlights that these findings reflect the relevance of cash as a payment method, as one in ten people are still paid in cash and that cash remains an essential option for millions of individuals.
Volumatic has long championed the importance of payment choice, and in 2021, the company collaborated with organisations like the Bank of England, Cash Essentials, and Vaultex to produce the white paper, Consumers Demand Payment Choice, which stressed the importance of businesses offering diverse payment methods to meet consumer needs. This message was reinforced at the 2022 Volumatic’s Cash 2030 Conference, where key stakeholders, including The Co-op Food Group, the UK Cash Supply Alliance, and Enryo, united to support cash as a critical payment method.
As businesses navigate economic challenges, Volumatic encourages organisations to consider these insights and offer a range of payment options that meet the needs of all while ensuring no consumer is left behind.
The UK government has announced new regulations requiring online marketplaces and vape producers to contribute to the recycling of waste electricals, including vapes.
The reforms, unveiled on Tuesday by circular economy minister Mary Creagh, aim to address the unfair burden placed on UK-based businesses, which have shouldered the majority of costs for recycling and processing waste electricals.
With 100,000 tonnes of household electricals binned every year, the Department for Environment, Food & Rural Affairs said the changes will for the first time make sure the burden of these costs does not unduly fall on UK retailers compared to their online rivals.
“Electrical equipment like vapes are being sold in the UK by producers who are failing to pay their fair share when recycling and reusing of dealing with old or broken items,” Creagh said.
“Today we’re ending this: creating a level playing field for all producers of electronics, to ensure fairness and fund the cost of the treatment of waste electricals.”
Under the plans, online marketplaces will need to register with the Environment Agency and report data on UK sales of their overseas sellers. This data will be used to calculate the financial contribution the online marketplace will make towards the costs of collection and treatment of waste electricals that are collected by local authorities and returned to retailers.
A new category of electrical equipment for vapes will also be introduced to ensure that the costs of collecting and treating vapes fall fairly on those who produce them.
Scott Butler, executive director at Material Focus, welcomed the reforms, emphasising the growing issue of FastTech items like vapes.
“These small, cheap and too easily thrown away items contain valuable materials such as copper, gold, and lithium which are lost forever and could instead power our tech future. Creating a separate category for vapes means that those who have been profiting from the boom in their sales can be held responsible for providing public takeback, communications and most importantly pay for recycling them,” he said.
Material Focus research reveals that 5 million vapes are either littered or thrown away weekly in the UK. These devices, often not designed with recycling in mind, pose significant challenges for waste management.