PARTNER SURVEY
IS THE NEW NORMAL WORKING FOR MERCHANTS AND SUPPLIERS?
Now is the time for independent merchants and their Suppliers to refocus on service and sales, says Nick Oates, Managing Director of NBG.
W
e have weathered the COVID storm, but as the merchant sector comes out the other side we are still living with its
impact. After the last few years, it is tempting to try and forget the difficult times and focus on the future. Certainly, at our recent conference we concentrated on how merchants can meet the many challenges that we will face in the coming years as the landscape keeps changing.
However, there is no hiding from the fact that the pandemic has had a significant effect on how independents and Suppliers’ priorities have been impacted. At NBG we decided that we needed some hard statistics to prove what in our bones we knew was happening. We surveyed both our Partners and Suppliers to find out two overarching things – what’s working, and what’s isn’t. This was part of our ongoing efforts to ensure that everyone at NBG, from Partners to Suppliers, are on the same page. Comparing the results between the two groups would be an invaluable way of doing both this, and, more broadly, taking the sector’s pulse.
So, what has everyone been doing these last few years? Well, there was a clear contrast in focuses, with many Suppliers looking inwards to review and optimise existing processes. This has resulted in a greater prioritisation of sustainability and facilitating greater working from home. Priority has also been given to their product ranges, staff structures and logistics, with great waves made in adopting more eco- friendly practices.
Certainly, our Partners agree that progress has been made in the development and supply of environmental and sustainable products. Nearly 30% of our Partner-base say the supply of sustainable products has got better or much better, compared to 66% of Suppliers. But though this figure is encouraging, it does also demonstrate a disconnect, and that more needs to be done by Suppliers to communicate their concerted efforts to greenify their operations to the remaining 70% of Partners. This sustainability shift during COVID has
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undoubtedly been impressive as recognised by our Suppliers. Being able to pass such a success story down the line to Partners and then to customers would undoubtedly be a good thing.
Responding to customer demand By contrast to the Suppliers, our Partners have been a lot more outwardly focused, looking at improving the customer experience, and, by association, sales. This can be seen in the survey findings – nearly a third spent their time revamping their website or changing their product range. Incredibly, more than a quarter opened new branches despite the upheaval of the past few years, clearly demonstrating ongoing optimism in the builders’ merchants sector.
This observation was also made in another presentation at our Conference, looking at trends with tradespeople since the group’s previous Conference in 2019. Specifically, working in conjunction with NBG, retail trends consultancy Insider Trends noted from its research that an enforced explosion in digital activity across builders’ merchants when the pandemic put restrictions on in-person interaction.
Yet while 61.5% of tradespeople bought more tools and materials online during the lockdowns, in-person sales recovered markedly once these limitations were removed. Indeed, 92% of trade sales are now continuing to be made through traditional ordering routes, including from brick-and-mortar stores. These are fascinating observations that are explored in further detail elsewhere in this supplement.
Has service taken a backseat? Good news so far, but when you dig a bit further some of the issues both parties have been experiencing begin to come to the fore. Understandably, the major issue for Suppliers has been energy supply and cost increases. These, along with the increasing cost of raw materials, have combined to create an environment of increased running costs. Consequently, it is logical that Suppliers have taken a more internal focus, keeping their house in order by doing their best to mitigate market forces that buffeted the sector in 2022. Though this approach has been
understandable, it does not mean issues have not arisen that require further steps to resolve. The greatest of these has been our Partners’ perception that Supplier service levels have dipped from pre-COVID times. In short, looking inward has impacted customer service, with independent merchants feeling the impact of Supplier price increases, reduced margins and increasing business running costs. With a recession on the horizon – if not already here – the industry needs to get on the front foot and focus on service and selling, Joined-up thinking is therefore a must, and Partners and Suppliers need to get on the same page if they are to best weather the coming storm. But though this is undoubtedly the overarching goal, our surveys have demonstrated more work is required to achieve it. When we then asked both Partners and Suppliers to rate the service they provide to merchants scored out of 10, the gaps and strains in the merchant/Supplier relationship started to become clearer. Suppliers gave themselves an eight, but Partners only gave their Suppliers a five. This suggests to us that there is a difference in perception of what constitutes good service that is potentially undermining relationships and sales. So, what is causing this customer service perception gap? Again, our research offers an insight. For instance, stock availability is judged by over 60% of Partners to have got worse or much worse when comparing pre-pandemic levels with those today. In contrast, only 12%
January 2023
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