Hoshizaki reveals all on legally-verified dealer policy

The Telford base is now the manufacturer’s central distribution hub for Europe.

2017 was certainly a year of change for ice maker manufacturer Hoshizaki UK, as it brought the Gram refrigeration brand on board as well as new senior management in the form of UK and Ireland director Steve Loughton, and director of UK sales and chain accounts, Simon Frost.

One of the first steps the new managers took was to change the sales areas, reducing them by one to eight. Frost said: “We felt that the areas were too restrictive and we’ve removed the need for cross-fertilisation for our area sales managers, who now sell both the Gram and Hoshizaki brands. Dealers have responded well to it because they are seeing a defined and a more structured approach to how we manage the areas.”

Reporting that 2017 sales were comfortably ahead of the previous year’s, Loughton detailed: “The dealer market is very strong for us, particularly for Gram. Hoshizaki historically did sell to some on a direct basis so we said that has to change completely, because we believe in the distributor channel and we see that continuing to grow.”

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Frost now estimates that 85-90% of sales are now made through dealers. He commented: “There were some tangible differences between Hoshizaki and Gram and as part of the coming together of the two companies we wanted to rationalise the approach to the market and really focus on improving our interaction and relationship with our dealers, which of course is key.”

He also wanted to reassure the market that the Gram brand is still very much present, to encourage dealers to buy both main brands, and acknowledge that while there were some supply capacity issues for some ranges over the summer, these hiccups have now been resolved.

One of the main ways the firm is focusing on the distributor channel is through a new dealer policy it is in the process of rolling out. In light of the well-publicised CMA investigation into the catering equipment sector, Hoshizaki invested heavily in getting the new policy ratified by lawyers to ensure that the programme does not infringe competition law.

According to Frost: “When the policy is signed by our dealers and delivered by our sales team, they can be confident that the method of delivery is right and that they are not going to land in any hot water with the likes of the CMA.

“We didn’t want to put anybody in a position where they were uncomfortable about signing the policy agreement. One of the drivers was not to rule out online traders, but it’s key that we retain control of our brand and give dealers the comfort that there is some control in place that isn’t overstepping the mark in terms of dictating to them about price.”

The policy involves two main tiers of dealer discount: platinum and gold. Frost was keen to underline that this won’t necessarily be based on turnover, however: “It might be that a small, family-run dealer gives us the lion’s share of their business in our sectors, so we don’t want to penalise them for low turnover. We are trying to look at each situation in the round – we want to work with dealers who are loyal, prepared to sell both brands and promote our products.”

As part of the policy, each dealer will provide three points of contact to ensure redundancy of communication, should any relevant staff member depart the business.

The platinum agreement involves a dealer charter, with key qualifying conditions specified including a commitment to sell both brands, availability of stock, training their sales team and design facilities available. A dealer has to meet six of the 10 requirements to qualify for this top tier. For this they receive discounts on every Hoshizaki and Gram line and special pricing for promotions. “Every element has a timeline, they are not open-ended,” said Frost. “Sometimes the agreement might be based on unit sales rather than value.” The manufacturer is estimating around 50-70 dealers across UK and Ireland will qualify as platinum.

Plus platinum dealers can receive rebates if they meet certain conditions, such as paying on time. These are divided into low, medium and high, with the decision made in each case at the discretion of the area sales manager. Hoshizaki also ensured that its sales team was trained in detail on the policy to ensure that there is no ambiguity about what they are delivering to dealers.

For those designated as gold dealers, there are no rebates, though there are still discounts available. “Just because a dealer starts off as a gold, it doesn’t mean we can’t change that,” commented Frost. “We’ll be trying to develop them and give them incentives to try and drive them upwards so they can benefit from the rebate scheme. The policy is a manageable living document.

“As our sales team work with dealers they might unearth some nuggets that perhaps we didn’t even know existed or we’ve never really developed in the way that they should be. It empowers our area sales managers to go out and talk to all of their dealers before the decision is made.”

Hoshizaki will be encouraging more occasional purchasers to order through two wholesalers: Axon Enterprises or RH Hall. “We’ve developed relationships with two rather than one to give dealers the choice,” detailed Frost.

Hoshizaki’s Telford factory serves the whole European market as a central distribution hub, with the Gram brand inventory and parts distribution recently added. This resulted in construction of an extra mezzanine level for parts storage in 2017.

Plus other investments have been made in the facility, one of the latest being adding a second climate room so that two climates can be tested simultaneously.

Each production line within the 70,000ft2 factory is colour coded and has been kept busy thanks to growing demand. When the manufacturer first occupied the building in 2009, it produced 11,000 units annually. But today this has grown to 20,000 and by adjusting the capacity and adding an extra worker shift that can expand this total to 24,000 if necessary.

“The capability that we have in Telford is a hidden gem that no-one really talks about,” said UK and Ireland director Steve Loughton. While director of UK sales and chain accounts, Simon Frost agreed: “It’s very understated – they rarely even mention they have the Queen’s Award for Enterprise!”

In other developments, the group’s Swanley offices underwent a £50,000 makeover to bring the Hoshizaki and Gram teams together, with the formal merging scheduled for 1 January. This also involved a £25,000 IT investment to integrate the two systems.

Key objectives going forward will be making a big splash as a joint entity at Hotelympia, as well as a further push on hydrocarbon ice makers. “We have also got a couple of new products to launch – one on the Gram side and the other for Hoshizaki,” said Loughton.

“Going into 2018 we are in a far better position organisationally and structurally because of the investment and the focus on being one company with two brands. We have got some ambitious targets for the next few years and we have the ability and flexibility to invest.”

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