Alan Dodds, managing director of Roca Group UK, has claimed growth in the online bathroom market is beginning to plateau.
Speaking exclusively to kbbreview at hotel design exhibition Sleep, Dodds (pictured) said increased takeover activity among internet companies suggested some may see now as the best time to look for a buyer.
“What I find quite interesting is that quite a few of the big internet businesses have changed ownership quite recently,” Dodds said. “They’ve sold out or they’ve sold part of the business.
“Those that have done that have done so at a time when they could perfectly project the future. They could show a graph of sales in 2012-2015 and project it ahead and say, ‘here’s what the business is worth’. But actually those guys maybe now predict that the market is starting to plateau and are getting out when the business has the highest value. If you knew the market was going to keep growing exponentially on the internet, you probably wouldn’t sell your business would you?”
Dodds cited online giant Victoria Plumb, owned by the Walker Group, as a good example of an internet company that has enjoyed enormous growth in recent years, but sold a majority stake to US private equity firm TPG in April 2014.
“The Walkers are a very clever family,” Dodds said. “They’re classic entrepreneurs, so why would they sell a big chunk of a business like Victoria Plumb if they didn’t think they could get more for the business now than they would in two years’ time?”
Dodds likened the current situation to the one originally faced by independent retailers concerned by the growth of the multiples.
“You’ve got the scenario of the growth of DIY years ago and somebody saying in five years’ time they’ll have 50% of the market and they haven’t,” he said. “They got to 20% very quickly and then it plateaued. I just wonder if the internet is the same? It’s rapidly growing, but it will get to a plateau of a certain share of the business and that will be it. That’s great news for independent retailers.
“You’ve also got the situation that more and more internet businesses want brands. They’re realising they can get a certain amount of growth with own brand, but beyond it they need brands.”
Dodds also hinted that Roca would continue to focus on supplying independent stores rather than the online sector.
“Would I say we’ll never trade with the internet? No,” he said. “But do we want to support the traditional bricks-and-mortar showrooms? Yes, because people want to see the product and deal with professionals – but to say we’d never trade with the internet is a dangerous route.”