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'The loss of Drumwright is a huge wake up call to all of us'

Daniel Gumble
'The loss of Drumwright is a huge wake up call to all of us'

Retailer, Dave Bamford, store manager at Wigan-based Symphony Music, has his say on why the recent loss of Drumwright is a wake up call to the industry and how the market may have become unviable to even the very best retailers…

Each year we learn the sad news of businesses that have failed to get through the Christmas period and are wound up. These businesses are our competitors, but also our friends and acquaintances. A cold heart would point to the structural problems that may have caused the failings: their inability to adapt, or reliance on financial leverage. Frankly, businesses not fit for purpose.

Conversely, a warm heart would empathise to the human aspect - those poor souls who have lost their jobs and careers; and the business owners who watch their years of hard work and dedication plummet into a vacuum of forgotten obscurity.

But this January was different. Amongst the notifications of businesses who recently expired, one name instantly stood out: Drumwright. A business of long-standing repute that has gone to the wall.
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So far, so normal. But there is a glaring difference with this failure that made me sit up and worry.

Drumwright were good.

I don't mean they had a good history and had dwindled away. I mean they had taken their firm historical foundations and seemingly built a desirable business that had attempted to move with the times. They were proactive. They had an enviable knowledge of the products and the market. They had a large customer base that universally applauded them (just look at the tributes on their Facebook page). They had a lovely store with great product that was displayed in a clean and forward-thinking manner. They embraced social media.

Based on last year's accounts they had a relatively strong set of financials (or at least far less worse than other surviving businesses in this industry). On the whole, they added genuine value to their products, and that is a retailer’s primary reason for being. They were the metaphoric star pupil for the suppliers - everything they could possibly ask for. I'm genuinely sad to see them go.

Can you see where I'm going with this? If Drumwright were doing pretty much everything right, then we have to address the possibility that their failure was pre-ordained by a market that has become unviable for good retailers. That, naturally, scares me.

The drum market is particularly tough at the moment, but across the industry it is becoming clear that margins are simply too low for all but the most efficient to survive. And this is because the market is being driven by those retailers who use price as their only weapon. There - I've said it. Nothing new. And whilst this is a problem that transcends most of retailing, we are an industry that needs physical retailers. That, I strongly believe.

And so going forward they won’t be able to rely on price as their advantage – because, as it stands, the value is added for them by good stores, such as Drumwright. Drumwright and the like are subsidising the price-led retailers. Those parasitic stores arrive at the party when the customer is all gooey-eyed over the product they have fallen in love with and lure them with the only thing they have to offer - a stupid price that is unsustainable for the industry. No work. No selling. Just a price.

A 'loyal' customer may offer the good retailer an opportunity to match the price. Every day I hear 'I can get it for £99 but I'd rather buy it from you because I want to support local business', as if this somehow makes them a prized altruist.

In reality, I want punch them in the face. Because they have already taken everything I can offer and then smugly want to pick my pocket with their ‘loyalty’. And I can't say no because they will then perceive me as a 'rip off' before taking their business to the 'price' retailer that has also just picked my pocket.

The simple reality is that my loyal customer thinks I'm too expensive - not that the competitor is too cheap. Semantics? Maybe, but it is a thought-provoking concept.

Aside - It would be nice if business taxation could evolve to help represent the value stolen by consumers from the physical stores they visit. But I doubt that will happen. And so we return back to where I started - prices are too low.

We then reach a point where the industry has to collectively make a decision Of course, there are legalities involved with trying to influence pricing, and the market is clearly suffering from too much product with low demand. But beyond the law and market forces, I believe there is a structural problem within the industry's supply chain that actively promotes the deterioration of the good dealers; there are practices in place that promote short-term successes that are gradually polarising the business to fewer and fewer dealers.

As our suppliers inevitably chase growth - either to survive or thrive - it is natural to seek business where the volume is. And my diatribe above clearly indicates where the volume is polarising to - the price dealers. We therefore reach the laughable irony in that the best deals are often reserved for those who buy the most. And as this volume can only be moved to the consumer in sufficient volume by using price, they are being subsidised by the suppliers to price their good retailers out of business.

But it isn't just product cost that suffers in this way; the larger dealers often get the most support in the way of profile, store displays, retros, SOR stock, marketing rebates, in-store events, credit lines. In short - if I choose to buy enough product then I will likely get far more in return from the supplier, regardless of how well I choose to represent their product. And I will naturally have to find a way to move the extra product I have bought.

So here's a thought for the brand owners and suppliers. Those thousands and thousands you have earmarked as a carrot to reward your favourite customers who buy big - why not instead give them to customers who don't buy big but represent your product well? Or, in fact, those who barely represent your product at all yet. I'm sure they could use a fancy display, or a new website developing, or SOR stock, or marketing funds, or business support.

Why not try to balance the industry by rewarding potential rather than just numbers? On paper it may look stupid - giving a business back more than it spends. But unless you invest in the emerging dealer base you will soon only have the price-focused guys left. And to those guys who buy big but add nothing in the way of value? Don't be fooled you need them. Any sales they make for you were already in the bag due to some poor dealer already doing the work without reward.

A few less bad boys equal a lot more good boys. And a lot more advocates for your product. Otherwise, you're on your own - just you and a couple of big boys with warehouses.

Tags: Retail , drumwright , symphony music , dave bamford , Opinion

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