Bill Miller, managing director of The Kitchen and Bathroom Buying Group (KBBG), has claimed mass-market distributors need to “reinvent themselves” to survive in a rapidly evolving marketplace.
Speaking exclusively to kbbreview at the Living Kitchen exhibition in Cologne, Miller (pictured) said the rapidly emerging influence of German buying groups like KBBG parent company Der Kreis and MHK in the UK could be explained by the weakening of the distribution model, which he said formerly acted as a “a kind of buying group in itself”.
“The UK has been on the radar of German buying groups for many years,” he revealed. “The reason they didn’t come is they weren’t familiar with the UK market and, at that time, distributors were strong and did things that buying groups did.
“I was at PJH, so I know the distribution channel very well. We had 30-odd brands on the books and we’d go to a dealer and say ‘why don’t you sell this brand?’ We’d give them access to product, like I do now. Would I give them better terms? Probably not, but if you wanted to buy a Neff oven, you could only buy through distribution.”
However, Miller claimed this form of distribution is now “reducing in the UK and losing its strength, leaving a gap for buying groups to come into the market”.
“Manufacturers made the decision many years ago to go direct to the retailers and it rang the death bell for the mass market distributor”
Bill Miller, MD, KBBG
“Distributors have got to reinvent themselves,” he insisted. “Manufacturers made the decision many years ago to go direct to the retailers and it rang the death bell for the mass market distributor. The future of distribution is a bit like what Maurice Lay have done and reinvented themselves with the very successful Caple brand. And it’s what Waterline have done as an extension of Crown.
“So the days of the mass-market distributor stocking it high and making slim margins isn’t going to work anymore. Why would you pay £100 and buy it from a distributor when you can pay £80 and buy it direct? Unless that distributor is a bit different and a bit unique. But that would be a smaller distributor rather than the big players. So the demise of distribution has left a bit of a gap in the market for buying groups to exploit.
“Look at MHK, it has decided to come into the market having seen what Der Kreis is trying to achieve. There were some who said buying groups won’t work in the UK. They said not one dealer will sign, but we’re growing at the rate of one new retail member a week.”
Miller also downplayed doom-laden forecasts over the potential outcome of the Brexit negotiations.
“Dealers came into the new year with reasonably full order books,” he argued. “I don’t believe German kitchens and appliances will stop coming to the UK. There are people who believe that, I don’t.
“Maybe there will be a cost implication if you’re importing into the UK. But consider your average dealer who does one kitchen a week. If they have to pay a bit extra and fill out some extra paperwork, are you telling me they don’t have time to do that in a normal day? I’m very optimistic. Yes, it’s a bump in the road, yes there may be a few delays and a few issues, but the industry will get over it.”
• For the full interview, see the March issue of kbbreview