EDITOR’S COMMENT: Distributor disarray

Kitchens & Bathrooms News Editor,
Philippa Turrell

Just what is happening to the distribution business? First AWA Bathrooms announced its intention to stop trading from December 2012 and now tc bathrooms has gone into administration. We all know the market is tough out there – but that tough? And is it the only plausible reason for distribution companies to be suffering? While we all know the economic climate is far from easy, has it just continued to exacerbate issues already taking hold in the distribution sector?

Of course, distributors could be more open to economic pressures than any other business, with spiralling petrol costs causing logistics to soar. But, equally, perhaps a clue could also lie in a comment made by joint administrator of tc bathrooms, Hunter Kelly from Ernst & Young, which, in addition to the economic climate, stated tc bathrooms had “been unable to service the debt taken on to fund its recent consideration expansion”. So, are in fact, distributors in danger of trying to extend their business just too far?

AWA Bathrooms was a regional distribution outfit, servicing the South, before going national and opening (then subsequently closing) a Northern depot in Manchester. And in a recent interview on kandbnews.blogspot.com, chairman of Swift Electrical says distributors now offer too many brands. It points to distributors seeking to become generalists, rather than specialists, in order to gain a larger slice of a smaller, and (some may say) diminishing, pie.

And, then, there are retailers looking to enter the distribution market by sourcing their own goods from overseas, in a bid to gain a USP and to prevent customers from ‘like-for-like’ shopping around. The demarcation lines of ‘who does exactly what and where’ in the bathroom and kitchen industry have become increasingly blurred, if not completely removed.

So what are the answers for bathroom and kitchen distributors, which are not only in competition with businesses in their own channel, but perhaps now even selective retail showrooms? Well, that’s the $1million question.  Could it simply lie within the old adage “turnover for vanity, profit for sanity”? Undoubtedly (as in the case of tc bathrooms), a catalogue of issues can drive a business into administration. But with news that parties are already interested in buying tc bathrooms, let’s just hope that this distributor can be saved and show it’s not game over for this sector.

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Swift: Distributors need to offer less

Speaking at Swift Electrical's  Trade Event to celebrate Belling's 100 years trading, Chairman of Swift Electrical, Andrew Swift said distributors offer too many brands. Andrew Swift commented: “If you go back 10-15 years, then all the established distributors stood for a couple of products. This distributor would be known for that brand. Through a process of various manufacturers merging, distributors merging, we have all ended up, in terms of appliances, selling everything. I think the worry is that nobody particularly stands for anything”.

He said specialisation may be key for the future success of the distribution chain, stating: “I think what you may see is that  distributors will start to specialise a bit more in terms of brands. I think if we narrowed the offering down a bit, and did everything from sales and marketing to stocking in more depth; maybe we’d serve the industry a bit better.”

He continued: “If you ask us where we are going to be in three to five years time, I hope to be more of less doing what we are doing now, but slightly more successfully.”

Andrew Swift hit out at critics who believe there is no longer a role for distribution in the industry: “I think distributors are here for the reasons they have always been here. We act as a useful source of credit. It is probably our most important function”.

And he says independent retailers need to combat pressures on appliance margin because of online trading, by maintaining high levels of customer service. Swift added: “I’ve been in this job just over twenty years now and I think retailers all believe distributors make the same margin they do on appliances, which we don’t. So certainly retailer margins have been eroded because of the internet, but inevitably that does have a knock-on effect on us. But that’s business. The battle ground will boil down to what it always boils down to, which is service.”

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