Margins on appliances are ‘utterly absurd’

A retailer has hit out at suppliers for making it “impossible” to earn sensible margins on kitchen appliances.

John Pelosi, director of Monmouthshire-based Caldicot Kitchen and Bathroom Centre, has argued that the industry “will have to act” soon if independent businesses are going to survive against the rising tide of online retailers.

“Am I the only studio owner to find it utterly absurd that the one item I can barely make any money on is fundamentally at the very heart of the kitchen?” he said.

Pelosi went on to explain that he has spent many “fruitless” evenings ringing round to distributors trying to price-match a handful of internet sites that customers have presented him with.

“I am faced with the prospect of either; buying the appliances online myself and passing them on at zero margin as “goodwill”, since I will, at least, make some margin elsewhere on the whole job, or selling a kitchen minus the appliances, and telling the customer to source, fit and seek support for them himself,” he said. “Such a model is unsustainable, and the industry will have to act at some point.

“I find it heart-breaking that I feel the need to show some customers my pricing books to prove that their internet prices are lower than my own from places like Swift. Yet, I feel the need to do so sometimes to prove that I am not “on the make”, but that my costs and the total kitchen prices are genuine – something customers occasionally struggle to believe, when they see some unbelievable appliance prices online.”

However, Pelosi did praise brands, such as Neff and Whirlpool, for trying hard to redress the balance.

He claimed that these brands managed their routes to market and pricing well and added that while he was sceptical at first about the prospect of extended guarantees for displaying outlets, he has been able to make a “consistent margin” on their appliances.

He said he hoped that more brands would “follow suit”.

“I, for one, am in the process of clearing a number of brands out of my studio on whose products I can no longer make a profit relative to the faceless websites,” he explained, “and will be actively promoting only those brands who provide me the support, resources and, most importantly, pricing to compete with the websites who leech off studios like ours. Who will waste time, effort and showroom space to show products that ultimately customers buy from and the like.”

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