Are buying groups set to thrive or falter?

Buying groups are a common feature in most markets where physical, branded product is sold through a reseller network before it reaches the final user.

The notion that by combining forces companies can improve their bargaining power to secure better pricing conditions than they would do independently is the bedrock upon which such groups are founded.

Unlike some industries, though, the catering equipment market has never been overrun with buying consortiums. Only one — Cedabond — has genuinely stood the test of time, approaching 35 years in business.

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The perceived value of a buying group like Cedabond will invariably differ depending on who you speak to, but with more than 100 members if you include both manufacturer and distributor parties, its influence clearly spreads wide and deep.

That’s not to say it’s all smooth sailing. Senior personnel changes at the organisation this year have led some to question its direction and, at the time of writing, it still remains without a full-time executive director.

When that vacancy is filled it will be interesting to see how the next chief goes about achieving progress and whether any radical steps are proposed to take the business forward.

After all, the imminent arrival of a new leader would appear to coincide with Cedabond facing the prospect of gaining some competition. A new group by the name of ENSE is vowing to put a fresh spin on the buying group concept, taking its inspiration from techniques implemented in the US market where the model is rife.

Will the UK catering equipment market welcome it with open arms? ENSE insists the first dealer members are now signed up and activity will increase over the coming weeks, but it seems manufacturers are likely to want to see who joins the group before formally announcing their involvement with it.

There will be those who are scpetical of ENSE’s plans and with margins notoriously tight some have already questioned whether a ‘second’ buying consortium could lead to retros and discounts from suppliers being spread even thinner.

In interviews published in the latest print issue of Catering Insight, both Cedabond and ENSE claim there are clear differences between one another’s business models. That may well be the case, but at the end of the day they both share the same challenge of having to deliver sufficient value to keep members engaged.

Whatever path these two groups end up taking in the future — and obviously ENSE still has to prove itself first — their development will be compelling to observe.

Regardless of any perceived similarities or differences in strategy, the success of any buying group still boils down to facilitating the kind of benefits and results that members simply couldn’t achieve on their own.

What do you think of buying groups? Is there room for more than one buying group in the UK catering equipment market? Get in on the debate by sharing your view in our comment section below.

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