close

Shop-Equip founder mourns former company’s passing

Header_AboutUs crop
Shop-Equip was based out of premises in Mansfield, Nottinghamshire.

Following the recent news of web-based dealer Shop-Equip’s demise, the company’s original founder has stepped forward to offer sympathies to those involved.

Graham Watkins wrote: “My wife and I started Shop-Equip in September 1989 as a local small retail equipment distributor offering local supply and service.

“We started to expand and manufacture shop furniture, sold to Mostyn PLC and retired in 2003 but continued to watch with interest and, I have to say, some pride as the business continued to grow.”

Story continues below
Advertisement

He sympathised: “Many of the staff who have just lost their jobs were with us all those years ago. There are no winners here. The employees, customers and sundry creditors will all feel the pain and I feel particularly sorry for the staff thrown out of work just before Christmas.

“The internet flattens the marketing chain and is claiming many victims in the retail and other sectors. Sadly, more, I believe, will follow Shop-Equip down the gurgler.”

When Catering Insight further questioned him on how the catering equipment industry is progressing, he responded: “The conflict between discounters and catering equipment suppliers offering a more comprehensive service is nothing new. As far back as the 1980s, commercial refrigeration was being offered by individuals operating from a home office who never handled the goods. They simply advertised in the trade press, taking orders then ordering from a wholesaler or importer asking them to deliver direct to the customer.

“This drop shipping meant there was no ongoing cost, the sale was always cash positive with the customer paying up front while the dealer had credit, usually 30 days, and there were no bad debts to allow for or to try and recover. On the face of it a lovely simple business model.”

However, Watkins continued: “With the development of the internet, this type of low cost selling has mushroomed. Dozens of distributors, big and small, have gone down this route. All the distributor needs is a flash website, a credit card machine to take payments and an account with the right suppliers.

“The increased competition drives down prices and it has become a race to the bottom. Bigger companies, with higher fixed costs, doing the same, cannot compete. I’ve heard of sales being made with 4 or 6% gross profit – madness; no business – except maybe one trading from a back bedroom –can live on that type margin. It’s a recipe for disaster as Shop-Equip and others have recently discovered to their cost.”

He concluded: “Calls to stop the discounters are unrealistic, like King Canute telling the tide not to come in. Let’s face it; you can now buy commercial catering equipment from Amazon.

“These are the same discounters that have crippled the retail high street. Do they care? The answer is no. Amazon might be late to this particular market but no-one is going to stop them.

“The only way to compete against the internet discounters and maintain respectable margins is to add value to the sale; offering advice, design, installation, emergency out of hours service etc, but it isn’t easy and it all costs money. If they can get away with it, savvy caterers will take the advice and design being offered and then shop around for a better price. It’s human nature.”

Tags : administrationdealerdistributorinsolvencyinsolventliquidationonline dealershop-equip
Clare Nicholls

The author Clare Nicholls

5 Comments

  1. All true Graham and add the CMA to the equation who are quick to tell manufacturers / suppliers that it is illegal to try and ensure that routes to market are protected for them, their dealers and ultimately the users themselves.

  2. Internet purchasing is now a way of life for all businesses and consumers. With regards to the catering equipment market, the only winners are the end users, they have no idea how cheaply they are buying their equipment and presumably still think dealers are making huge margins. Some distributors tried to support manufacturers by only selling at agreed margins but now that has been stopped margins have shrunk again. Unfortunately it only takes one online retailer to drop its prices and the rest have to follow suit in order to remain competitive.

  3. All very true Graham, I am one of those who add value to my mail order company by getting out there and visiting my clients and potential clients. But, I am frustrated by some manufacturers who offer bigger and bigger discounts to the larger discounters in the field…. this then results in lower and lower prices,,,pricing out those distributors who are trying to “add value” through advice which has been built up over a number of years. A possible answer…. manufacturers should offer the same NET prices to all their distributors, which hopefully would slow down the trend to the lowest price that you can find. Martin Cater Data

  4. Established in the 1950s, we have had to completely reinvent ourselves to avoid the same fate as Shop Equip. Slash costs, slash margins, build existing markets.

    As a caveat, we lost significant business to the likes of Shop Equip. Their margins were extremely low while we maintained a healthy margin but sold frankly, nothing. While I’ve got great sympathy for them, it was inevitable. If you try to offer the kind of service we gave during the 80s and 90s, at an Internet price, it’s inevitable that you’ll find it’s not a sustainable model.

    But while the brands are happy to supply, and the legislation prohibits setting a price, it’s a bright new horizon for us. The internet is our main marketing tool, consultancy is now a chargeable service, installation and service handed over to trusted partners.

    Name an industry that isn’t experiencing the same problem. Look at the high street brands – decimated.

    You just have to find a way to exist within it. Adapt and dump core beliefs about what makes a business, a business.

  5. I feel the days of referring to internet dealers and non- internet dealers should probably be over.

    These days most businesses have a various amount of E-Commerce capability. one end of the spectrum, some being 100% reliant, the other end, some with little more than a holding page and most have a level somewhere between.

    For us, a manufacturer with a very niche but technology driven product, we know the importance of having dealers that are capable of selling and working with us, not just discounting or undercutting others. We know that the dealers that support us are the lifeblood of our business.

    There are internet dealers that offer an amazing amount of added value to both customer and supplier whilst others are purely focussed on price. however I know this is also true of a more traditional style dealer too.

    As Synergy Grill offers end customers incredible benefits such as 59% saving in gas alone, no fat trays as all fat is atomised etc, the technology to do this makes the product slightly more expensive over a standard chargrill. but this cost is returned to the customer within a year.

    Knowledgeable dealers understand that selling a product such as Synergy Grill, means they will be returning that initial purchase price to their customer over and over again in the running costs. Dealers that only focus on price, struggle to understand or explain this to customers as they are often only interested in their own initial sale.

    For me, these days, its a case of finding great dealers that have great product knowledge and are able to use these skills to recommend the right product for the customer. This is what makes the difference between the discounter and the salesman as opposed to their level of internet capability.

    As manufacturers, we have to support the dealers that want to learn, train, promote and demonstrate. It is this very reason that Synergy Grill launched its Authorised Dealer Programme this week. Its designed to help, support and nurture dealers that help, support and nurture us.

Leave a Response