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Super-troopers

He who trusts secrets to a servant makes him his master.

The Beatles, ABBA, Take That and now UNIBUS or NMBER: as of next February there will be a new Supergroup to deal with.

The coming together of the two major co-operative buying organisations in the UK merchanting industry has been one of those secrets that’s not really a secret.

We all knew it was due to happen, we all knew there was stuff being talked about, but nothing was certain until the news broke yesterday morning (December 4).

It had to happen. It’s been talked about for years – Andrew Nicholls mooted it in his chairman-of-NMBS-speech at the organisation’s gala dinner way, way back in the day – although for a long time it was thought of as just rhetoric and talk.

However, the industry is now in a very different shape to what it was when Unimer launched in 1935 and NMBS in 1963.

The basic premise of a buying group – or merchant co-operative as Unimer structures itself – is that by coming together, individual merchant businesses can offer suppliers a wider customer base and, therefore, negotiate lower prices.

Building material suppliers are geared up to produce volumes from their factories or distribution hubs. They need to know that they have certain guaranteed volumes in order to be able to plan their sales and their future investments, much like any other business. By guaranteeing them those bigger volumes, the theory goes, buying group members can get better prices from the suppliers.

It’s a simple matter of buying better by buying bigger. National merchants are able to command lower prices from their suppliers because they are buying more product. Therefore, the argument goes, the more merchants there are committing to a particular supplier, the better the terms will be of the supply deals with that supplier.

It is good for the individual partners because they know that by coming together, they will have a power with the supplier that individually they simply cannot command.

From the suppliers’ point of view, the invoice clearing is a major, major benefit. Talking to a supplier yesterday, he told me that sometimes a customer with a number of branches will send through 400 separate telephone orders a month – in theory, that could mean 400 separate invoices, all requiring someone to deal with them.

Things change, however, and this last recession went further, lasted longer and cut deeper than we cold ever have predicted way in 2008. But it’s not just this last downturn that has changed the merchant industry landscape. The economic success and the subsequent recessions of the 1970s, 1980s 1990s and 2000’s have reshaped companies, suppliers, competitors and the business landscape.

As a result, what worked for a selection of like-minded businesses at various points during those years, pooling their resources to better negotiate with suppliers, is unlikely to work now. The industry has changed, the economy has changed and the merchant and supplier members have changed along with the organisations themselves.

The merger will see NMBS gaining around 300 new merchant members and 300 supplier members, plus three Unimer board members and Leo Martin will be joining the NMBS board.

It all kicks off from 1st February and, naturally, there are still plenty of details to be ironed out.

About Fiona Russell-Horne

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

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