Well I hope you are all refreshed after a relaxing festive break and ready to attack the year ahead. And it looks like we will need all the energy we can muster, as the market will continue to be quite challenging.
The end of last year saw the demise of several dealers, and the story from each one seemed to be that economic conditions were biting. However, the contributing reasons each company stated as to their downfall then kicked off a debate on the Catering Insight website on the subject of online trading, a topic that is often returned to.
While margin slashing and ‘box shifting’ is frequently seen in a negative light, I think everyone would do well to look at their own behaviour as consumers. How many of us are consistently buying from Amazon and their ilk? You compare prices online and then plump for the lowest one, because the product is essentially the same, so getting it cheaper makes you feel you’ve got a good deal.
It’s exactly the same situation for a lot of end users, especially those on a lower budget. The trick for dealers is to make it clear why operators should pay more than the prices only generating a single digit margin. You will never be able to compete at rock bottom prices – as demonstrated by some in the latest round of insolvencies – so perhaps the best way is not to try. Explain how additional assistance and advice will help end users in the long term. Clarify why project management, maintenance and repair services will actually be more economically sound for their business models.
There will always be a certain percentage who try and pick distributors’ brains for advice and then order equipment elsewhere, but there are two choices there: accept that this is part of the industry, or don’t offer counsel for free.
The Pandora’s box of the internet has been open for quite a number of years now, and it’s not going to go away. The catering equipment supply chain, like all industries, needs to ensure it is embracing new technologies and taking advantage of them. This may sadly involve more companies going to the wall, but it really is a case of adapt or die.
It could even be argued that this process just represents the market correcting itself, if there is a surfeit of dealers.
However, in amongst all this doom and gloom there are still many success stories still to be told. And that’s why I’m proud of the Catering Insight Awards, as they celebrate the cream of the sector, with the industry itself deciding who deserves praise. Congratulations to those voted the victors, and for the rest, there is always this year’s awards!