wholesales, economic foresights

Euler Hermes, the global leader in trade credit insurance and member of Allianz, analyses risk across economic sectors to provide you with valuable insights and inform your decisions. Our expertise is your best business ally, especially in these unprecedented times. Learn more about the current challenges of the wholesale industry and how to protect your company against insolvencies.

Covid-19 had a massive impact on economy and businesses in Belgium. 2020 saw the wholesale industry go in very different directions across segments and countries. Restrictions on non-essential stores gave a substantial boost to e-commerce sales, while the same non-essential stores could not entirely compensate for the lost sales of months under lockdown. Food wholesalers, on the contrary, benefited from generally higher food spending from households, thanks to restrictions imposed on the food-service industry (horeca, leisure, etc.).

Matt Williams, Risk Director Benelux at Euler Hermes:

"Despite the re-opening of physical retail stores in December following the last lockdown, online sales increased by over 50% compared to the same period two years ago. Covid-19 has compressed 5 years of retail evolution into a 9 months revolution. Not only has Covid permanently changed the way we buy goods and services but it has also pushed businesses in the retail sector to innovate and take advantage of these new trends."

The successive confinements weigh heavily on many companies. Euler Hermes estimates that one out of five companies in Belgium risks a cash flow crisis in 2021. Many retailers could not entirely compensate for the lost sales of months under lockdown. They have no longer sufficient cash to pay their suppliers, dragging wholesalers and the entire supply chain with them.

Euler Hermes expects a record insolvency number in Belgium in 2021 and 2022. We forecast an increase in insolvencies as from the second half of the year. The sectors most affected by Covid-19 represent over 125,000 companies and nearly 423,000 employees in Belgium. Hotels, restaurants and leisure sector but also automotive and service industry and non-essential products retail will be the most affected.

Turning to 2021, Euler Hermes anticipates a mirror situation in which food retail sales will hit a plateau after their 2020 highs while discretionary retail sales will bounce back from their 2020 lows. E-commerce, while still growing at a double-digit pace, will experience a slowdown in sales growth but consolidate its position as a major distribution channel across all product lines. Integration of digital technologies, adaptation of store formats to changing consumer preferences and efforts to mitigate price increases will remain high on the agenda of all retailers and their suppliers.
  • Fast-moving consumer goods (food, personal care, house care, etc.):
    Traditionally, the most resilient segment of the industry with little volatility in consumer spending and high industry concentration. The main challenge for wholesalers is to adapt to the new retail reality: brand have to adjust their store mix to address changing consumer preferences.
  • Furniture, electronics, appliances, hobby and leisure:
    Segments with generally higher profit margins but greater volatility as they sell discretionary consumer goods. Wholesalers that provide e-commerce specialists should be able to make good business. Uncertain transition from a brick-and-mortar to click-and-mortar business model.
  • Apparel and accessories:
    Much like other discretionary spending, apparel and accessories see reduced consumer spending and demand when the economy decelerates.
  • Beauty and cosmetics:
    Very dynamic sales globally pushed by the retail expansion of luxury companies.

Protecting your company has never been so important than now. Especially in this crisis period, you are never safe from the default of payment or the insolvency of one of your customers. Very often bad payments and insolvencies lead to a snowball effect.

A trade credit insurance protects your business against the risks of defaults of payment and insolvencies of your customers:

We monitor the financial health of your customers

We take care of the collection of your unpaid invoices

And we compensate you when your customers don’t pay

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