A notable shift is underway in the retail industry, as wholesale regains prominence after years of direct-to-consumer dominance. New data from Lightspeed’s NuOrder platform suggests that wholesale is now the primary growth driver for many brands, reflecting a broader recalibration toward profitability and scale.
According to the 2026 State of B2B eCommerce report, based on insights from 200 senior wholesale leaders, 78% of brands now rank wholesale as their top investment channel. By contrast, direct-to-consumer physical retail has fallen sharply, with only 18% of brands prioritizing it. This signals a clear pivot in how companies are approaching growth, with wholesale increasingly viewed as a more predictable and margin-efficient pathway.
Retail expert Bruce Winder says the shift is not entirely surprising given the challenges associated with scaling direct-to-consumer operations. “DTC is a tough business unless you already have a strong wholesale foundation,” he explained. “The volume just isn’t there in most cases compared to wholesale, and the cost structure of retail can be very difficult to sustain.”
Margin Pressures Drive Strategic Reset
The renewed focus on wholesale growth in retail is closely tied to a broader industry emphasis on profitability. Rather than pursuing aggressive expansion, brands are prioritizing cost control, pricing flexibility, and margin improvement.
Lightspeed’s data shows that 54% of retailers are focused on reducing costs, while 46% are emphasizing pricing flexibility and 43% are targeting margin gains. This marks a clear departure from the growth-at-all-costs mindset that characterized much of the past decade.
Winder noted that many brands underestimated the operational burden of running their own retail networks. “Retail is a low-margin business with significant fixed and variable costs,” he said. “A lot of companies stepped into it and realized the economics didn’t justify the investment, especially without sufficient scale.”
He pointed to high-profile examples such as digitally native brands that struggled to sustain valuations once they expanded into physical retail, highlighting the risks of relying too heavily on a direct-to-consumer model.
Wholesale Offers Scale, but Not Without Challenges
While wholesale growth in retail is gaining momentum, the infrastructure supporting it remains underdeveloped. Only 9% of brands report having fully integrated wholesale systems, while 62% cite a lack of standardization and 63% report ongoing data accuracy issues.
Even as visibility improves, with 74% of brands now able to track sell-through data, nearly half say that information is not actionable. This disconnect underscores what the report describes as a “maturity gap” between wholesale’s strategic importance and the systems needed to support it effectively.
Winder emphasized that wholesale allows brands to focus on core strengths such as product development while offloading many of the operational complexities associated with retail. “You don’t have to worry about all those downstream costs,” he said. “It can be a more profitable part of the value chain compared to running stores.”
The Evolving Role of Channels in a Polarized Market
The resurgence of wholesale also reflects broader structural changes in retail. The market has become increasingly polarized, with large-scale players dominating volume and specialty brands competing in more focused niches.
“Retail today is very polarized,” Winder explained. “At the high-volume end you have major players, and at the other end you have specialty brands. It’s difficult to operate in the middle, especially for multi-brand retailers.”
This dynamic is influencing how brands approach distribution. Many are now adopting hybrid strategies, using wholesale to achieve scale while selectively investing in direct-to-consumer channels where it makes economic sense.
Winder added that success often depends on aligning the business model with product economics. “If you’re selling high-ticket items with strong margins, you can make retail work,” he said. “But for lower-priced products, it becomes much harder to cover the costs without significant volume.”
