MAPs versus margins

The news that another web-based catering equipment distributor has gone to the wall was met with little surprise by commentators on this very website.

Birmingham-based Mansons Catering Equipment is due to be dissolved after a members and creditors meeting scheduled on 8 May.

But this announcement prompted a wider debate on the merits of minimum advertised pricing (MAP) to maintain margins – the very issue that is currently being investigated by the Competition and Markets Authority.

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“They [online catering equipment suppliers] are all competing against each other on price. Something has got to give,” said David Carslaw, director of Comcat Engineering.

A commentator who identified himself as Paul Grant agreed: “Working for tiny margins will eventually end in tears. Maybe minimum advertised pricing is the way forward!” An anonymous poster added that all brands implement MAPs stringently in the US.

Malcolm Morris of manufacturer Trak Hupfer weighed into the debate, writing: “The end user needs to be paying more. It’s the manufacturers that can do more to protect the ‘bricks and mortar’ dealers’ profits. The trade is being led from the wrong end. Who is wagging the tail these days?”

Paul Grant responded by saying: “Manufacturers have tried to help the responsible dealers who have the overheads related to showrooms, on the road representation, customer service etc by trying to implement MAP.

“Unfortunately, the CMA believes this could be considered as a form of price fixing! Maybe Malcolm can suggest other ways that manufacturers can help? Refusing credit accounts doesn’t help if an online dealer is happy to pay pro forma.”

A commentator from an equipment importer who wanted to remain unidentified added: “It’s only those willing to work on incredibly small margins (sometimes as little as 2%) that have the problem with MAP pricing.

“Those who have more of a service to offer, other than shifting a box, want and need to earn more than what the box is worth and are generally better customers to suppliers and manufacturers.

“It’s very challenging for manufacturers and suppliers to implement a MAP policy without the legal blurb being blurted out! We welcome any suggestions on how we can legally and effectively set such structures.”

Stefan Szoka, sales manager at distributor, Bartlett, advised: “The answer is quite simple. If suppliers gave the bedroom internet companies a small discount and a higher discount to dealers with engineers etc., the problem is solved and legal. Otherwise in a few years there will be no engineers left. No margin left to train or employ them.”

Jay Bris from commercial dishwashing sales and repair specialists Cater Buddy detailed: “At our company we simply do not supply machines anywhere near as cheap as the internet companies. We are not a charity – we have premises, wages, stock and vans to pay for.

“How anyone can run a business on 2% margin I’ll never know. More companies must stand up and refuse to sell products at this sort of margin. Don’t be busy fools!”

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