Swift Electrical’s commercial director, Malcolm Scott, looks at the plight of Wolseley-owned distributor BCG and suggests that while the distribution channel is very much alive, manufacturers are no longer looking for big players offering mass coverage but those who are more flexible and focused
As we approach the 2018 kbb Show in Birmingham, it seems fitting to say a little about a company that has been quite visible at the show over the years – a company that until recently regularly took full-page adverts in this publication, BCG.
BCG is a division of the £14 billion building distribution group Wolseley, which has a total of 39,000 employees. The staff employed within the BCG division have all been advised that a consultation period has begun with the likely outcome that some or all of the business may be wound down. Indeed, the division has already been reducing the number of kitchen brands it offers and the frequency of deliveries as part of an ongoing restructuring plan.
BCG was created by Wolseley when the group merged three distribution businesses – Broughton, Crangrove and Galley Matrix. Broughton was one of the largest bathroom distributors in the UK, specialising in supplying baths, showers and sanitaryware to merchants and retailers. Crangrove was the largest distributor into the DIY shed retail sector. Galley Matrix was a kitchen specialist distributor created from previous mergers of SKS, Kershaw and Galley Matrix. Each was a substantial, long-established business when taken over by Wolseley.
As the clear number-one supply group to the plumbing sector via Plumb Center and a major distributor to other building sectors via Build Center, Hire Center and Control Center, Wolseley embarked upon a long-term strategy of buying smaller businesses within the kitchen and bathroom distribution sector with a target of developing an industry-leading distributor. BCG was the result.
However, the kitchen and bathroom sector is ever-changing and while this ‘super distributor’ business was being created, direct trading between manufacturers and retailers increased, alongside the huge growth in internet retailing, both of which changed the way that manufacturers use distributors.
Manufacturers no longer seek big, mass-coverage distributors that cover all sectors indiscriminately with a ‘one offer for everyone’ strategy. Today’s distributor must be flexible and slot into a manufacturer’s multichannel brand strategy. Manufacturers expect them to specialise in specific customer types and work closely with their own staff to ensure that all activities are coordinated.
In the current distributor market, it is not size and economies of scale that manufacturers seek, but rather focus. Distribution is still very much alive, but the sector is now populated by specialists who focus on specific retailer types, enabling manufacturers to cover all parts of the market without wasting energy competing with themselves.
You can no longer survive by just being big.