Certain sections of the catering equipment market will no doubt have reacted to news of a brand new dealer buying group being formed in the UK by asking: ‘do we really need one?’
As the man responsible for sparking such a debate courtesy of launching the European Network of Supplies and Equipment, Bob Adams’ answer to that question doesn’t exactly need spelling out. Coming from a market where failing to belong to a buying group can leave a dealer seriously disadvantaged, Adams knows firsthand how powerful the model can be if executed properly.
And while he has worked in the industry long enough to appreciate that the UK market operates completely differently from his native US, he remains convinced there is a gap for an organisation like ENSE this side of the Atlantic.
This, he says, is because distributors are crying out for greater financial and marketing support from manufacturers while the manufacturers themselves are desperate to ensure dealer members are driven to support them.
Adams believes ENSE’s structure holds the key to its success. Unlike traditional buying groups it will not function as a co-op nor do members become shareholders. This, he claims, will allow it to drive the kind of actions and behaviour he says both parties are demanding.
“Our members are members and we are a ‘for profit’ organisation, so the only way that this system can work is for those dealers to support the manufacturers that are in the group and not go offshore to get products of similar ilk at a lesser price,” he says.
ENSE insists it won’t interfere in the purchasing process between dealer and manufacturer, but instead channel its efforts into making sure dealers receive ongoing marketing support and access to rebates and discounts. In turn, it is pledging to drive the dealer hard to support the suppliers. “What we will do is deliver profitability to dealers and deliver market share to the manufacturers, which is important to both,” he declares.
Although at the time of writing ENSE hasn’t gone as far as naming its inaugural members it does claim to have signed up its “first few” dealers. Its target, which some may view as ambitious, is to have between 30 and 50 on its books by the end of the year.
The picture in terms of the manufacturer side of things is less clear. Adams insists positive conversations have taken place with a variety of suppliers but many, understandably, want to know which dealers are going to be in the group before taking any further decisions. “It is one of those ‘which comes first, the chicken or the egg’ scenarios,” he says. “The manufacturer process is slightly behind the dealer process as the dealers have input into which manufacturers will be part of the group. That said, there are already a handful of manufacturers committed to joining.”
ENSE’s strategy, if it goes to plan, involves restricting the number of manufacturing partners to two per product category in order to drive loyalty to those brands from the dealers.
Members are free to venture outside of the group to source brands that are not part of ENSE, but Adams notes there is an obligation to support group allies first and foremost.
He insists the organisation will keep a firm handle on the value that dealers and manufacturers are delivering to one another. “If we have a schedule of what dealers have to do but they are not supporting those manufacturers then they are going to be put on probation and ultimately the dealer will be out of the group. And if the manufacturer isn’t participating in our marketing programmes or helping the dealer to drive some of that business then the manufacturer is not going to be there very long either.
“Again, in a ‘for profit’ organisation I am going to have two different sides looking at me saying: ‘Bob, how much money are you making?’ And that is a legitimate question, but it is legitimate if I am not driving those two things — the market share to the manufacturers and the profits to the dealers. If I am driving both of those then they can ask all day long and I’ll go: ‘are you doing better since you been in the group? I am, too, so we all are winning — don’t worry!’ At the end of the day, that model of ‘for profit’ is really what our difference is.”
It is impossible to consider ENSE’s impending arrival without speculating how much of a fight it is looking to pick with Cedabond, the incumbent buying group for catering equipment distributors. Adams prefers to play the situation down, pointing out that he has even met with members of Cedabond’s board on more than one occasion to discuss his intentions.
“The one thing that I know is that in a culture where you have only got one of something — in this case one buying group — it begs for a competitor. Now, am I really a competitor? No, because I am not going after their dealers, I am going after different dealers, but at the end of the day we kind of do the same thing so you could classify us as a competitor. I would classify us more as a friendly competitor and, again, I have already reached out and met Barry [Hallam], Clive [Groom] and Mike [Nunn]. I am not trying to hide myself or anything else — here I am and here is what I plan on doing. And they all understand that. But I think, ultimately, we have got a different business model, it is a very proven business model and it exists in North America in about 20 different forms.”
Click on page 2 below to continue reading article. [[page-break]]
Adams stresses that he is not directly targeting Cedabond dealers — though if any are unhappy ‘they know where to find me’ — while he says equipment manufacturers do not have to choose between one buying group or the other. “A manufacturer can be in both groups, that is not a problem,” he says.
Whatever happens, he insists ENSE is committed to taking a model that is proven in North America and adapting it to how business is done in the UK.
“I am not trying to change the way business is done in the UK, I am not trying to alter a culture of the UK —I want to embrace that — but bring a model that I know works in a free enterprise society,” insists Adams. “And that’s really what it is — a model that works in a free enterprise society that doesn’t currently exist in the UK.”
Setting out expectations
Becoming a member of the European Network of Supplies and Equipment (ENSE) is a relatively straightforward process, according to Bob Adams, the man behind the association. He says the only cost to dealers will be a “nominal” joining fee, and then beyond that dealers must adhere to a set of guidelines to maintain their status.
This includes actively promoting and supporting supplier members, maintaining their creditworthiness, meeting payment terms with suppliers, and participating in the marketing programmes that ENSE will be involved in creating. They must also attend an annual conference that it plans to hold.
Manufacturers, meanwhile, are also required to support its marketing initiatives, as well as devising reward and rebate programmes for the dealers.
These initiatives can be tailored to individual dealers, multiple dealers or all dealers depending on what results the manufacturer is looking to achieve.
Adams says ENSE is currently looking at potential locations to base its UK operation and will also seek to hire a sales director.
“The office should be opened sometime after the Olympics are concluded. Several sites are being considered in the Manchester and Birmingham areas,” he revealed.
“The office will be our European operation headquarters too. We may ultimately have an office in Hamburg or in Paris or somewhere, but the bottom line is our HQ is going to be in the UK.”
Name: European Network of Supplies & Equipment (ENSE)
Mission: To bring leading foodservice equipment and supplies dealers from Europe together with premier manufacturers to increase revenues and profits through collaborative efforts.
Tel: 07774 930387
Directors: Bob Adams; Robert Autenreith; Gary Licht