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Good buys and goodbyes

If we do meet again, why we shall smile,
If not, why then this parting was well made

Last week, Huws Gray left the NBG buying group on the grounds that the company’s expansion plans simply won’t allow it to comfortably remain a partner in the group. The news took many people by surprise as Huws Gray’s John Jones and Terry Owen have always been some of the most enthusiastic of the group’s partners. At times they were positively evangelical about the benefits that the NBG buying power had brought the north Wales-based independent.

Businesses have to grow, they have a duty to their shareholders to do so – whether those shareholders are pin-striped pension funds, European dynasties or individual family members.

So it’s not surprising that Huws Gray should want to continue the quite phenomenal growth pattern of the past few years. Basically, Terry told me they have doubled their turnover every five years and puts a lot of that down to the help, support and buying advantages that being partners of NBG has brought.

Thinking about where Huws Grey are geographically, it’s obvious that any further growth will inevitably bring them into the locality of other NBG partners. The company isn’t going to up-sticks and open up 500 miles away just to avoid encroaching on its neighbours. They’re going to grow in a steady, healthy, manageable way and that means expanding their area bit by bit as the opportunities present themselves.

I remember when NBG was born, when it was a coming together of three like-minded buying organisations – Chandor, Prospero and Simba – to pool their knowledge and buying power so that they could offer suppliers higher guaranteed volumes and get greater discounts and rebates in return. And then it grew and grew and grew.

It grew because more independents wanted to gain the buying – and networking -benefits, it grew because the group itself wanted to be able to offer suppliers more members and greater volumes in return for better deals.

And if those suppliers are going to provide good enough deals to enable the independents in the group to compete with the national merchants then they need to know that the commitment is there behind those deals. Which is why NBG executive chairman Allan Durning is so hot on deal compliance.

Both parties are adamant that the parting is not about Huws Gray’s inability or unwillingness to stick to the deals, rather it’s a case of their wanting to retain ownership of all the decisions that affect the business. Nor is it about moving from one group to another. Huws Gray are to go it alone.

The bigger the business, the more important it is to have control of it: in NBG’s case this means total deal compliance, in Huws Gray’s case it means controlling their own deals in all categories and thereby having the flexibility to grow and expand on their own terms.

As independent buying groups continue their own growth strategies and independent businesses continue their own growth strategies, we are likely to see more geographical or ideological clashes and probably more companies leaving their groups, no doubt amicably ¬- that is the spirit of the independent buying groups after all – but leaving nonetheless.

About Fiona Russell-Horne

Fiona Russell-Horne
Group Managing Editor across the BMJ portfolio.

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