Getting bigger by being bigger?

None are so fond of secrets as those who do not mean to keep them. 

Q: When is a secret not a secret?

A: when you’ve told one merchant that it’s a secret?

Unfair? Possibly. Maybe. Probably not. The biggest non-secret so far this month was the news, released just as the doors opened at NMBS’s annual exhibition, that independent buying groups NBG and H&B were “in talks” with a view to merging. Yes I know that seems ages ago but bear with me, I’ve been in deepest Norfolk since then, where it’s still 1956.

Was it a surprise? Possibly. Maybe. Probably not.

‘Tis the way of businesses to grow and change and grow and merge and grow and change and so on and so on. Buying groups are no different. Those of us who can remember when Jewson was a little timber and builders merchant chain based in Norwich, can also remember when the big news was the on-off-then-eventually-on again merger of NMBS and Great Central Merchants.

NBG itself was the product of the marriage of Prospero, Chador and Simba; h&b itself grew when it merged with buying group Western Builders Merchants in 2008. The larger the bigger independent groups get, the more there is for smaller concerns to creep in or start up. After all, from the merger of Jewson and Harcros was born the once-small, now massive independent that is MKM.

As businesses and buying groups get bigger, so their competitors do likewise in order to be better competitors, leaving room underneath for other companies to come in. Bringing NBG and h&b together will clear a space for other buying groups to expand is they so choose.  The growth of Fortis and the possible coming together of NBG and h&b means those smaller groups now have a little more wriggle room. As do CBA and PHG, although these two tend to be more focused on doing what they do best for their members without too much concern about what’ going on with the rest of the gang.

Of course, it’s perfectly possible for businesses to grow without recourse to buying group deals, Huws Gray being a case in point. Having been very much a part of NBG for many years, the Anglesey-based business left the buying group 10 years ago and, probably, have never looked back. A company who has doubled in size every five years probably needs to be its own master, requiring more flexibility than can be granted through partnership of a group, no matter how like-minded the peers therein.

Obviously, mergers of this type are not simple and both sides have a lot more talking to do to work out how it would work if it goes ahead.

If businesses are to grow they have to embrace change or at the very least consider it carefully, which is what these two buying groups are doing.