By StatsCan

Summary

Wholesalers may be one of Canada’s best kept economic secrets. Because of their role as intermediaries, you don’t hear a lot about wholesalers. But that’s not to downplay their key link and impact on the Canadian economy.
In Canada, wholesaling is a multi-billion-dollar industry. In 2004, wholesalers did about $450 billion worth of business. Between 1997 and 2004, wholesale revenues rose by 42%.
Based on growth in gross domestic product, wholesale trade out-performed the total economy during this period. In 2004, wholesaling also ranked as the third most important sector in the economy.
In addition, the industry was a beacon when it came to employment, with new jobs tending to be high paying and full-time.
Wholesalers have been quick to adopt new information and communications technologies and have recorded an above-average growth when it came to capital investments. As a result, labour productivity in the industry is one of the highest in Canada.
Globalization, offshore outsourcing, and the arrival of American-style retailing, such as big box stores and club warehouses, have all helped propel wholesalers forward. This is especially true in terms of commodities with a predominantly retail base, such as motor vehicles, food, and home and personal products.
For example, wholesalers have played an important role in getting motor vehicles, produced elsewhere in the world, to Canadians. Only five of the major automobile manufacturers produce vehicles in Canada, and six out of every ten cars in Canada are imported.
Likewise, with less and less consumer type products such as house furnishings, electronics, and apparel sourced from within Canada, wholesalers have been able to benefit by becoming a primary buyer and distributor of these products manufactured elsewhere in the world.
This study examines the Canadian wholesale trade industry, its phenomenal growth, and its role and performance in the context of globalization and strong domestic consumer demand.

Definitions

Wholesaler
A buyer in large quantities and subsequent reseller (usually in smaller quantities) to a wide range of clients such as retailers, industry or business users.
Activities may also include providing or maximizing market penetration for a product or good, advertising and marketing, consolidation of orders, logistics such as same day/next day shipping, training, repair services and/or warranty handling.
The sector often goes by numerous names, e.g., wholesaler, distributor, middleman; or more specifically; merchant, agent, rack-jobber, importer/exporter.
Wholesalers can operate independently, or, be affiliated with either manufacturers operating as marketing divisions or sales offices, or retailers operating as distribution centres for their corporate or franchise stores.
The products bought and sold are wide ranging; from primary goods such as raw logs or steel beams to high-end finished goods such as luxury automobiles or computer chips.
Wholesale Coverage
For the purposes of this article, the wholesale sector excludes the wholesaling of petroleum products, as well as oilseeds and grains. Wholesale agents, i.e.wholesalers who do not take possession of goods traded and trade on a commission basis, are also excluded.
Unit of measure
All dollars are in constant dollars unless otherwise noted.

One of the fastest growing industries

Based on contribution to gross domestic product (GDP), as well as sales growth in recent years, wholesale trade is one of the most dynamic and forward-moving industries in Canada.
Between 1997 and 2004, output by wholesalers, as measured by GDP, grew an average of 7.1% a year, the third highest rate of growth amongst all major industrial sectors. This was well above the 4.2% increase for the economy as a whole.
In 2004, wholesale trade accounted for 6.3% of industrial output in Canada, up from 5.3% in 1997. As a result, in 2004 it ranked as the third most important sector in the economy, up from fifth place seven years earlier.
Among the 18 industrial sectors defined by the North American Industry Classification System (NAICS), growth in wholesale trade was surpassed by only two other sectors: professional, scientific and technical services; and information and cultural industries.
By 2004, Canadian wholesalers were selling about $450 billion worth of goods and services, a 42% increase from 1997.
All wholesale sectors advanced, but the strongest growth was observed in those sectors with a predominately retail client base. Between 1997 and 2004, wholesale sales of personal and household goods rose 75%, automotive products were up 48%, and sales of food, beverage and tobacco products were up 40%.
Within those sectors, wholesalers trading in pharmaceuticals and motor vehicles recorded the strongest advance.

Employment growth: Wholesalers surpassed manufacturers and retailers

Wholesale trade was also a beacon when it came to employment. Between 1997 and 2004, employment in wholesale trade grew 28%. This was nearly double the rate of growth in both manufacturing and retail trade.
In 2004, employment in wholesale trade reached an estimated 584,000, which comprised about 3% of the nation’s entire workforce.
In addition, new employment in wholesale trade consisted mainly of high-paying, full-time jobs. During this seven-year period, the number of full-time jobs in wholesale trade rose 30%, compared with 13% in both manufacturing and retail trade.
Wholesale trade jobs also tended to be better paying. The average weekly earnings for someone working in the industry in 2004 amounted to $803.05, almost double the $453.61 wage in retail. In fact, on average, wages in wholesale trade were almost 23% higher than the $653.76 average for all service industries combined.

 

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