Managing director of the Kitchen Bathroom Buying Group (KBBG) Bill Miller says distribution is under threat from online suppliers selling direct and buying groups
The independent kitchen and bathroom market has had to face a number of challenges over the past five years.
Not only enduring one of the deepest and longest recessions in history, but coping with a number of significant changes affecting day-to-day business, including the increasing challenge of competing with the internet.
Kitchen and bathroom distributors have had to reinvent themselves. The majority of brands who previously only went to market through a distribution channel now offer some form of direct supply to retailers.
Some brands have created complex trading policies, which clearly favour direct supply customers, either through improved buying terms or by restricting distributor access to certain products in their range.
Distributors, today, often find themselves in direct competition with suppliers, whose brands they also stock, promote and sell.
To counter this, some distributors have gone down the route of becoming online retailers in competition with their own retail network.
Others have sourced their own product offers, creating low-priced, unbranded ranges.
The specialist independent kitchen and bathroom retailer feels they are fighting for their very existence.
The traditional trading boundaries between supplier, retailer and consumer have all become increasingly blurred.
The incessant increase of internet sales and the race to ever cheaper prices has led some suppliers to take the significant step of bypassing the retailer network completely and selling direct to the consumer.
This has created an environment where the independent kitchen and bathroom retailer feels under threat, not just from traditional competition, but from those that were previously considered suppliers.
Buying groups benefit
It could be claimed the demise of the distributor has left a gap in the market for buying groups to fill.
For an independent kitchen and bathroom retailer, there has never been a better time to join a buying group – there is strength and greater protection in working together.
Running an independent business is increasingly challenging at any time.
However when trading conditions become evermore difficult, business owners need to consider new ways they can take advantage of certain economies of scale.
Buying groups are common practice in a multitude of industries and markets, particularly those wehre a large number of independent businesses operate.
The KBBG offers retailers an effective and alternative way of buying products and due to the collective buying power can leverage improved conditions for members across a number of market-leading brands.
In addition, the KBBG generates and provides access to a number of exclusive, own-label kitchen furniture ranges and promotional campaigns, as well as offers a range of exclusive services to maximise the success of each specialist retailer.
The KBBG ensures the independent specialist remains ahead of the competition.
Buying groups are here to stay, particularly as there is now a greater understanding of the business model within the industry.
It is tried and tested, very successful in many other industries, and on the continent has had tremendous success for over four decades.
For the independent kitchen and bathroom retailer in the UK it may be new.
However, when the benefits are demonstrated and fully explained, it is an opportunity that an independent will wonder why it has taken so long to jump the English Channel.