Challenges and consistency: Robin Millwood speech from the 2013 CI(H) Suppliers’ Lunch

Combined Independents (Holdings) chairman Robin Millwood reflects on the past 12 months and unveils plans and priorities for the group in 2014. Below is an edited version of Mr Millwood’s presentation given at the 2013 Combined Independents (Holdings) Suppliers’ Lunch, held at The Dorchester hotel in London on December 3.

“I’m sure we have many members in our organisation that have been in business nearly 100 years, and for that they have to be congratulated. But what is more amazing is the milestone achieved this year by Combined Independents (Holdings) (CIH).

Who would have thought that in 1963, when a few dealers got together to form CIH, that – even with all the challenges that have been thrown up (and especially even more so today) – we would be bigger and stronger than ever?

This culminated in what only can be described as the best event CIH has ever put on: our 50th celebration, which attracted 300-plus members and the majority of our major suppliers. With this celebration still fresh in the memory, we may look at doing a scaled-down version, possibly next year as a UK conference: so watch this space.

I think everyone came into 2013 with trepidation; with the recession still with us, Comet having gone down, and the prospects for the high street not looking good.

One of the most consistent challenges that we’ve faced over the years is the ability to make a profit, and this year has been no different. But with the ever-increasing numbers of Agency lines, which now account for over 70% of our range, we’ve managed to offer our Agents a solid platform to do business.

And as a supplier, if you haven’t got the ability to offer us exclusive products, you will lose out on this multi-million pound business and the higher profile it gives you.

As all our members are on the high street, we’ve felt the full effect of all of the new ways of retailing (many of them, it would, appear with single-digit margins) and at the 50th celebration we set a challenge to our major suppliers of their thoughts on “showrooming”. To be honest, I’m still not sure if they answered the question.

Last week, I had a discussion with my barber (who is new to the business but the son of the owner). He said his fridge freezer had packed up, so he went down the road to an independent dealer – who happens to be a member of another buying group – looked round the showroom, and picked out a model he liked. But then said he would get his wife to look at it on the internet.

As is fairly typical, they then ordered it online – not from an independent! Needless to say, he now has my details. But even I couldn’t have competed. So, another sale is lost by us independents, thanks to “showrooming”.

We’re faced with ever-increasing criteria in our shops to get what would have been, in the good old days, a workable margin – bearing in mind the typical bricks and mortar overheads of 18-20%.

However, they appear not to be able to correlate discount structure to overheads. Hopefully in 2014 they will make every effort to address this in the new terms and actually wake up to the real world.

During 2013, Euronics has done everything possible to promote the brand help to drive customers into agents’ stores. And over the last three months we have relaunched euronics.co.uk, had millions of national leaflets distributed every month, and we’re back on television from December 20, when we launch our biggest-ever sale.

The Agency range is bigger than ever but there is still room for more and one brand that has done exceptionally well this year is Blomberg – currently double the increase of any other major supplier.

In 2013, there has been the usual number of losers and gainers. And to be honest, it’s not worth mentioning brown goods, because there’s so much red ink on our turnover list you would think that someone had been killed.

One part of the market that did seem to be promising was SDA, especially in the mid-upper to premium end of the market. But yet again, the suppliers have, as usual, made many lines unattractive to us – by either deciding to sell direct or to sell to the likes of Amazon which, at times, sells below our cost prices. But they still want us to stock and display.

I was walking around that very well-known electrical retailer Tesco last week and there, proud as punch, was a well-known German-branded pod coffee maker, stacked six high and three deep at below my cost price – and this company requires of me a range of SDA to get better terms. Needless to say, we’ve not bothered to stock this product this year.

White goods have been dramatically different and this could be something to do with Comet going. But the margins are still under pressure and, as ever, some suppliers are leading lights and others are rabbits in the headlights. I firmly believe from our figures that Agency products, especially exclusive ones, have been the winners.

We have several suppliers showing above 20% increase, and some just plodding along, thinking their name is good enough, without really trying. Sometimes it’s down to good old-fashioned human contact. I strongly believe that those companies that invest in people on the ground will reap the benefits. But remember, we need quality, not quantity.

One major difference that we’ve got now is the large range of wholesalers and distributors that supply through CIH/Euronics and some of these have shown spectacular growth this year. So we have all the angles covered for the supply to our members.

Now, to our two awards. Firstly, The Euronics Supplier of the Year. It was extremely difficult to select the winner this year as several got close. But you may remember that at the beginning I mentioned consistency? This supplier is certainly one that has been consistent for many years. Whenever and whatever we decide to do, it’s always first to agree. And when faced with a challenge, it always tries and comes up with the answer.

Although where appliances are made is not part of our selection process, I know they are extremely proud of the large production percentage that is made in the UK. What’s more, they are 28% up on last year! The company has many brands in its portfolio and recently added another. The Euronics Suppliers of the Year is GDHA.

Now for The Supporter of the Independent. This is always difficult because again and again the independent electrical retailer seems to get the thin end of the wedge. And as a company, we know the problems of creating a brand that will last and we have burned our fingers in the past.

Four years ago, a brave decision was taken by its parent company to trust us with exclusive use of a brand that was already available in a few European countries. I’m glad to say that it’s all worked out, and with a good tailwind, we may get to near-doubling our turnover this year, especially as the supply has been increased to meet the demand and extra storage has been made available. The Supporter of the Independent is Blomberg.

Well, another year has flown by. I would have liked to have said how good it has been but yet again, it’s been a very complicated year, with many problems for suppliers and retailers alike.

But we can still offer you the best solution to market with centralised invoicing, credit insurance, central stock, national branding with Euronics, Euronics online, the Euronics Showcase and extra turnover with all the new business on board and coming on board. And remember: this is from 1,100 high street shops.

But we can’t do any of this on our own. We need strong suppliers to help and support us. And it’s quite evident that those that go the extra mile will benefit.

I look forward to seeing you all at the 2014 Euronics Showcase in April.”

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