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.”
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.”