‘Change is the most difficult thing…’
Bathroom supplier Geberit acquired the Sanitec Group last year and officially merged the companies in January. Mark Larden, managing director UK and Ireland, tells Amie Filcher how it all went and what the group is planning next.
Sitting in the Gothic, industrial-style Malmaison hotel lobby overlooking Liverpool’s Princes Dock, the smell of freshly roasted coffee and the heat of the large fire fills the room, while Geberit managing director UK and Ireland Mark Larden reflects on the recent changes within the company.
I manage to catch up with him before he heads off to an evening celebration as a thank-you to his UK customers.
Last year, Geberit acquired the Sanitec Group, and with it its brands Twyford and Keramag Design, and the two companies officially merged on January 1, 2016. However, Larden admits that integrating the Geberit and Twyford businesses in the UK has been “massively difficult”.
“As humans, we always say we’re up for change, but change in people’s lives is the most difficult thing. Although people often say they like change, a lot of the time they don’t. And when you’ve got two companies coming together, it’s not just about processes and products, but the biggest thing is people and their culture.
“In Twyford, you’ve got a company that was established in 1849, so a huge name and long heritage versus the Geberit perspective, which has been in the UK for 15 years. You’ve got people at Twyford who have worked in the business 30 or 40 years. So you’ve got massively different cultures. I have to say it has gone extremely well, but it’s been tough.”
The acquisition also saw a slight hit to company profits, but Larden points out this is normal for such a large takeover. “I think the only reason they would say profitability was down is because when you looked at the two businesses, they were both highly profitable. But I think, marginally, Sanitec was slightly less profitable. So, of course, there’s going to be some dilution of a little bit of profitability, but also there will be some one-off costs because of the acquisition.”
The company has come a long way since its humble beginnings in the Gebert family garage in Rapperswil, Switzerland, in 1874. Some 140 years later, the company is almost unrecognisable, with turnover reaching £1.5 billion in 2015, factories in Switzerland, Germany and Italy, and the construction of its new 22,500sq ft headquarters in Warwick, doubling the size of its current premises.
Geberit only entered the UK market in 2000, and since then has seen growth between 10 and 15% each year. It saw UK turnover reach £60 million in 2015 and anticipates hitting the £100m mark this year.
“The main reason for [entering the UK market] was legislation,” explains Larden. “Up until 2001, the market from a plumbing point of view used to have toilets with a siphon and a lever, then European technology brought in a valve, push button and push plates. That was behind Geberit’s technology. So once the regulations changed in 2001, and the UK adopted European regulations, obviously the UK market became very attractive for Geberit.”
Larden believes the company’s success so far is down to “its focus on innovation and technology and its focus on training”.
Now with three brands in the UK – Geberit, Twyford Bathrooms and Keramag Design – the company is planning to couple up its products to expand in current markets, as well as new ones.
“We want to go forward with these three brands and couple the products together. They go together perfectly, really. So everybody we’re talking to, we’re just talking to them about a far greater bag of products. We’re able to now go to, let’s say, somebody that builds a hotel. Before, we’d only be talking about Geberit with a certain part of it, we can now talk to them about the toilets in their bathrooms and these sorts of things.”
He adds: “If you’d asked me about the economy before 23rd June I would have said, the market was set to be pretty fair for the next two or three years of low single digit growth. Following the decision to leave I think it’s fair to say we are about to enter a period of uncertainty where we have to wait and see what happens. Having said this it might have no effect and the economy will be fair for the next few years. Either way at Geberit and Twyford I think we are well prepared for whatever happens with our great products, great plans and of course great people. Through the most recent recession it was not just competing for market share within a given sector, in a lot of cases, we were creating new categories with new products.”
In the past four to five years, Geberit has seen wall-hung toilets become one of the biggest growing sectors in the retail environment. However, Larden explains that it is still only 10% of the market, and while happy with the increasing sector, he remains ambitious, saying, “we’ve still got 90% to go at”.
Having been in the bathroom industry for more than 30 years, Larden reveals what he finds most frustrating about it.
“When you go to exhibitions in Germany or other places in Europe, they’re a lot more keen, the installers and the whole industry, to really get themselves at the forefront of knowing the latest products. Whereas in the UK, generally, I think the installers and the industry are a lot slower to adopt new technology. And I think it comes back to us as a nation – we are quite reserved, we don’t want to talk about toilets and things like that.
“When you go to ISH in Frankfurt, you see hoards of installers down the isles. Some of them have taken two or three days off to visit miles of halls showing the latest products in piping, whereas over here they scratch around for people to go. That’s a frustration. We’re slower, I think, to adopt new products and allow people the time to research new products. We don’t seem to invest in that time.”
There has been a lot of talk about overseas competition, particularly in the online channel, is Geberit suffering from any pricing competition?
“The noise is certainly there and I think it is a factor,” he admits. “For me, it’s very, very small, simply because if you’re looking at a £30,000 bathroom, I’m not sure I would buy that off the internet. You’re going to want to go and see it and speak to a retailer. I think people do use the internet if they’re buying something in a box, that’s quite small.”
According to Larden, manufacturers need to embrace the internet as a tool to aid business in order to succeed in the technology era.
“We all use the internet and we as manufacturers have to make it available, with things like installation guides and tips on design. I think people naturally use the internet for research and I think we should embrace that. We definitely embrace that. We have one of the best sets of installation videos and we’ve got a fantastic website. We definitely want to support everybody that’s trying to help specification products by buying through the internet. But I think 99% of bathrooms are still going to be bought via traditional methods.”
Larden goes on to say that online competition pushes the company to step up its game and offer its consumers the best choice.
“It just puts even more focus on ourselves to make sure that we’ve got the best products. We’re looking at demand, we’re looking at technology and I think that’s the Geberit strength over the years. We’ve remained ahead of the game by focusing on technology and trying to second-guess the next trend in terms of the development of products and for me that will continue. The world is getting smaller, but it’s just about focusing on yourself and making sure that you’ve got the best products.”
With the growing trend of the Internet of Things (IoT) in products and the smart home, I asked Larden if he thinks it is really taking off.
“I think it is taking off. As long as there is a real tangible benefit with smart technology that makes my life easier, better, healthier, then I will pay more for those types of products. When you’ve got that type of technology and you’re asking people to pay a lot of money, you’ve also got to be able to sell it.”
However, Larden believes this is where the independent retailer, not the internet, is key in selling the benefits to the end user.
“If you’re talking about these smart bathrooms and innovative products, and you get a good independent retailer that is educated on the product, they are vitally important for getting those benefits across to the end consumer. Not just showing a product, but also being able to design and talk about the products. We speak to many retailers and the good ones are the ones that spend time training their people on the latest products. They’re not just showing a product, they’re actually interested in talking to the consumer.”
Looking to the future, Larden reveals that the rest of 2016 and 2017 will see it launch a number of new products. The company also plans to fine-tune its operations in the UK as he comments that the integration has really only just begun. “We’re getting ready for the [new] building and then really it’s plough ahead with really cementing the power of these brands and products. So watch this space.”