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12 April 2012

'Rogue' web dealers will go bust, says PJH

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PJH

Andrew Yates, chief executive of distribution giant PJH, has claimed bricks-and-mortar multichannel retailers have the best chance of success in the KBB market and that rogue ‘pure-play’ dealers will be gradually forced into submission.

 

“Internet dealers doing it for single-figure margins are bad for any business,” he told kbbreview, “but once multichannel gets to grips with the internet, the amount of money they'll be spending to capture search engine optimisation will be huge and I can't see how the small internet pure-players that are giving us all a problem with pricing can survive.”


Yates insisted that the prohibitive cost of media advertising would eventually help push pure-play web dealers out of business.


“They need to spend to be seen and on those margins they can't spend,” he explained.

 

“The cost of digital marketing is becoming more expensive than normal media advertising. So that part of the market will eventually disappear and we'll find good quality multichannel internet retailers.

 

The high street can compete and play against those retailers. We'll get back to a more competitive landscape, but one that people can survive in.

 

Multichannel retail will swamp the internet and the advertising costs will be horrendous, so hopefully these rogue online retailers will slowly disappear, because they won’t be able to compete with the costs of media advertising.”


Yates defended PJH against accusations that manufacturers and distributors are not doing enough to protect their independent showroom network from the threat of the internet.


“I'm not sure anyone can protect anyone from the internet,” he said. “If you treat it as the devil, you can make wrong decisions. It's an integral part of all markets. You need to find ways to use it and not be frightened of it, and that will mean change.


“The internet is set to be over 25% of the appliance market. How can you defend anyone against that? It's too big. But it can't install, it can't manage a project, it can't give an emotional connection with your sale, therefore retailers have to adapt, and we have to adapt.”

 

See the full interview with Andrew Yates in our May issue

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