MERCHANT FOCUS: H&B
where they are turning over £5m and can move into the wider h&b group. We have an active pipeline of individuals that would like to join the development group and we have a fairly challenging vetting procedure that we go through with them because it is about compliance. We aren’t interested in people who want to come in and join and then cherry pick the deals that they want to comply with. That’s not fair on the suppliers. Buying groups have been talking about compliance for decades and I think that by starting with a clean sheet with the development group, we really can deliver on that.”
He admits that the group did have to part company with two members who felt that they couldn’t really comply with enough of the deals. “Obviously we fully respect that because this has to work for all parties.” The benefits for those merchants who do feel it is the right move are huge, he continues. “At the drop of a hat you have 120 deals that have been negotiated for you at the centre you’ve got management of those deals that you don’t have to do yourself and you’ve got the support of one of the largest buying groups in the UK. Plus, there’s a clear pathway to even bigger returns as you develop into eh wider group. So the benefits for a business wanting to join are, I believe substantial. What’s not to like about that?” A typical £5m turnover merchant will have around 45% of that accounted for by purchasing and Durning says that the expectation is for, wherever possible, all of that purchasing to be via h&b. “That’s the challenge for both the merchant and the group to be able to deliver that. “We have started with no legacy issues so those members who join us in the h&b development group clearly understand that the requirement is for deal compliance and that their benefits for so doing are better deals, managed rebate coming back to them and a clear pathway into the main group.”
It’s all about compliance and within about four or compliant with most of the deals.
“ ”
The first member of the development group to have joined the main h&b group is Huddersfield heavyside merchant JTD Building Supplies.
“We don’t want to grow too fast, too quickly. I’d much rather take baby steps and get things right and settled before moving onto the next stage, so the development group route was perfect for us,” says managing director Tony Sharkey. The merchant, having bust out of the original premises, is now settling into a new two acre site on the edge of Huddersfield. “I first joined the h&b development group via the Timber Buying Group and then moved into the h&b development group. In fact we were the first members,” he explains. “We believe that we are able to show how quickly it can be done. It’s all about commitment and compliance and within four or five months we were almost fully compliant with all the deals.”
Sharkey explains that the development group offers its members a very good invoice price and a certain rebate on everything they buy. “When you join the main group, you get the full amount of rebate and there are
a lot more suppliers available to you. As an example, the rebate deal with a manufacture might be 10%. For the development group, that would be 7%, but moving up to the main group gives you the full 10% rebate. It’s something to aim for and to build up to.” Sharkey is also becoming something of an ambassador for the development group, talking to other potential members about what the tangible benefits were for JTD. One of the benefits for being part of the group - though this benefit isn’t confined to h&b of course - comes where there are supply issues, he says. “For example, earlier this year there were supply issues with PIR insulation and then later on, with supply of Earthwool. If we hadn’t been in the group, we wouldn’t have had any of those products to sell for months on end as they were on allocation. So there are other clear benefits over and above those related to the invoice price.” Plus, of course, there are the networking benefits from other members in other parts of the country who may have had similar issues. “For example, there’s a merchant I’ve met through the group that I would never have come across otherwise, and he’s been up here to see how I operate. We’ve exchanged ideas about potential new areas to go into. That’s the sort of thing that I would never have got outside the group.
“Moving into the main group opens up a whole load of new suppliers for us, so that will give us the potential to further develop our business, plus of course we will get the benefit of the extra rebates.”
Sharkey says that, for him, the key benefit is that he doesn’t have to be so concerned about all the minutiae of the buying process, because the deals have been done. “I don’t have to worry about whether I’m getting a good deal because I know I am. I can concentrate on trading and driving the business forward from our new premises. We have all the tools we need now.” BMJ
November 2018
www.buildersmerchantsjournal.net
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