Foodservice Equipment Reports

Buying Groups And Dealer Education

I’ve been having conversations about changes in the structure of the equipment and supplies market with a number of leading manufacturers the past few weeks. A clear trend is the impact of consolidation. Now that the Great Recession is mostly over and credit is flowing more or less freely, we’ve seen a wave of mergers and sales among chains, among E&S manufacturers and among dealers. And we expect more.

The result is more and more purchasing power is being wielded by the larger entities, whether they be chains and their purchasing co-ops, foodservice management companies, group purchasing organizations or dealer buying groups.

At the dealer level, the purchasing power of the leading buying groups is quite astounding. Our forecasting partner John Muldowney, principal at Clarity Marketing, did some analysis for our recent President’s Preview E&S Market Forecast meeting that demonstrates the point clearly. Of the 100 largest U.S. dealers, NexGen and Channel Partners Group control 52% of total sales. Add in SEFA and IFED and we’re up to 75%. Also remember that all but one of the members of NexGen, IFED and CPG are also members of ABC. John also estimates that the top 100 control more than 40% of the entire equipment market, well north of 50% of the smallwares and tabletop market and nearly 25% of fabrication.

Given this power, you would think that the manufacturers would be wary of the groups. Oh, they complain about the significant cost of the rebate programs, but to my surprise, nearly all have been quite positive about the role the groups are playing in the marketplace.

For one thing, they find group meetings efficient. They can communicate with a large group of dealers all at once, reaching not just the principals but folks in sales, purchasing and contract activities. The one-on-one meetings with dealers allow them to effectively introduce new products, receive feedback on mutual issues and the like.

Most importantly, they think many of the groups do a good job with training and education. As one manufacturer put it, “I think the groups representing smaller dealers do a particularly good job with training.” The general consensus was that the groups have helped upgrade the professionalism of the dealer community.

As you head out to your group meetings this fall, work hard to learn all you can. It will pay off for you, your customers and your factories.


Robin Ashton


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