Direct selling could damage manufacturers’ reputations, says Euronics chairman

Steve Scogings, chairman of buying group Euronics, has spoken out against manufacturers selling direct to consumers.

Scogings, who is also managing director of the electricals and kitchen retailer Stellisons, which has nine stores, spoke exclusively to kbbreview at this week’s Euronics Showcase event at the NEC, where manufacturers that supply the buying group displayed new and existing product ranges to its member retailer members.

Scogings was in no doubt that selling to consumers was best left to retailers and was not something manufacturers ought to get involved in. He told kbbreview: “There is no substitute for an independent retailer. No manufacturer can do the job as well as we can. What they are doing is saving themselves some margin and I think they need to look at how that experience will benefit them in the long run.”

Scogings also voiced concerns that by doing so, manufacturers might even harm their reputations. “Will consumers getting poor-quality service from a third-party logistics provider set them back a few years?” he said. “We do it much better, so they don’t get the problems. Most of the third-party installers won’t do awkward installations. They won’t fix any leaky plumbing or extend wiring. Independents just do that as standard. We don’t brag about it. And our customers appreciate that we go the extra mile. We get a lot of sales because these guys won’t do that and manufacturers will be the same.”

Scogings added: “They haven’t had the many years of learning that we have had. They are starting cold. And in the meantime, do they ruin their own image? I think there is more of a risk to them in doing it, than not doing it, to be honest. And I think that those brands that say they won’t do it [sell direct] have more loyalty from our members than those that do.”

He also went on to mention how Euronics is taking sustainability seriously by fitting its new northern warehouse with solar panels that provide all of its energy and bringing in new WEEE. Systems to deal with waste disposal, voiced his concern about one aspect of the Right to Repair legislation.

His issue is with manufacturers using product registrations for marketing purposes. He explained: “There is an issue we [Euronics] need to address and lobby Government on. Every manufacturer insists we register their products, but then they market to those customers, and they shouldn’t be allowed to do that. Not now they are starting to go B2C and sell to the consumer. We need rules to be put in place where if we have to register a product, they shouldn’t be allowed to market to our customers. There should be a law to stop that. Legally, we have to register the product in case there is ever a recall, but that data then gives that manufacturer a step up to sell direct.”

Scogings also spoke about the new changes to competition law that will see manufacturers and suppliers freed to sell to online retailers at higher prices than retailers who have invested in showrooms. He is not sure it is the best way to try to level the playing field.

He said:  “I am on the fence as I want to see the full details of how they are going to do it. I think the Government really need to address business rates first. Business rates is the biggest problem we have. I think maybe what they should do is reduce business rates on shops and increase it on warehouses. Because if you’re online, you’ve only got warehousing. So the cost then is in the warehousing. We have seen the benefits in our industry over the past two years when we didn’t have to pay rates and with that expense taken out of the business, it has made everyone more profitable.

The Showcase event was the first to be held since Covid scuppered the events for 2020 and 2021. Around 50 Euronics suppliers attended to show their products. Scogings said

That all those manufacturers attending had told him that the event had been busy and that they had been “swamped all day”.

Euronics itself, Scogings told kbbreview, had had a “fantastic year” last year and that it has expanded its purchasing and marketing teams to improve its service to its members and outlined its plans to trial digital ticketing in 20 stores in the near future.

Scogings said that in the past two years, they had taken on 39 new retailers and that its retail business in the UK was now worth around £1 billion.

Pointing out that Euronics is “the biggest buying group in Europe”, he added: “We need to talk that up more, and I think we are getting there. We are local guys, but we buy centrally. That gives us the benefits of both.

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