Power Players 2020: On the web wave

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Nisbets is still the market leader, but with the size of the pie inevitably shrinking, it remains to be seen what share it can retain.

In the perennial bricks versus clicks debate over the relative merits of online catering equipment dealers as compared to their offline rivals, one fact has remained constant: web-based distributors constitute the top revenue generators in the industry.

And while we can still say that for the 2018-19 financial years we are focusing on in this year’s Power Players, web distributors were flying high, all the signs are that online dealerships will face as much, if not more hardship than kitchen design houses. Perhaps it could be said that their business models are only sustainable with a constantly expanding market – and if this precludes them from putting together a ‘rainy day fund’ for when the situation becomes dicey, as it undoubtedly is now, then perhaps the whole strategy needs a rethink.

Already we are seeing massive restructuring at market leader Nisbets, and though the Bristol-based company is at pains to emphasise that its core remains strong, it is finding itself having to adapt to a rapidly changing market which will (at least for a while) be more reliant on equipping foodservice sites for takeaway and delivery services, or outdoor dining. This has prompted the dealer to axe up to 800 jobs – representing a significant 40% of its global workforce.

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As a marker of how quickly the situation changed we can look back at Nisbets’ 2018 results, which proved once again to be a record revenue total (the 2019 annual report was not yet available at the time of publication). The firm posted a massive £398.1m turnover for the year ended 31 December 2018, 5% up on 2017’s £380.3m. The growth rate did slow though, as the 2017 figure was 18% higher than the previous year’s total. Nisbets pinned the deceleration on the economic climate at the time, including the uncertainty surrounding the Brexit process.

However, another early marker to the market slowing was that Nisbets’ operating profit slid from £37.8m in 2017 to £28.1m in 2018, a 26% drop and the first reduction in 4 years prior to that. Conversely, gross margin improved by 0.7% to 37.1% as the group benefitted from seeking better market and product mixes.

Away from Nisbets, another major web dealer, Alliance Online, also posted a record turnover, but we can garner a more up-to-date picture from the Crewe-headquartered firm, as its latest published financial figures span the 12 months to 30 September 2019. During that year, Alliance generated £126.9m in revenue, an increase of nearly 11% over the previous 12 months’ total of £114.6m.

Operating profit likewise grew by 11% from 2018’s £6.4m to £7.1m last year. Margins performed as the company budgeted, at 27.8%.

At the time, director, Paul Bonson, stated: “The directors are pleased with the shape of our business model and the balance between national and regional trading.

“Alliance has increased turnover in line with our budgeted plan whilst managing to maintain margins in a competitive market. Focused efforts on service, costs and margins have ensured that profits have remained at a planned and healthy level.”

Other major online dealers have elected not to publish their full financial results, with well-known names such as Catering Appliance Superstore, Fridge Freezer Direct, G&M Supplies, CS Catering Equipment and Cater-Kwik enacting the small company abridged accounts clause. This likely means they are not on the Nisbets or Alliance scale though.

One thing we do know though is that tough times are upon us, and only the most agile businesses will thrive and survive this major global economic setback that the coronavirus pandemic has wrought. As web dealers have historically used advanced technology to their advantage, maybe they will be best-placed to adapt to the changes that are happening now.

Tags : alliancenisbetsonline dealerspower playersweb dealer
Clare Nicholls

The author Clare Nicholls

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