There will always be a need for merchants – says HPS

In recent months, the role of the merchant branch has come under scrutiny as internet retailing has increased. Installer spoke to Alec Meadows at HPS to find out what the future holds for this crucial part of the industry.
At first glance, the merchanting sector appears to be one of the most competitive aspects of the heating and plumbing industry so the rise of internet retail will have only added to the challenges faced by the various companies already in existence.
Rapid growth
For HPS, one of the newest and fastest growing plumbers’ merchants in the UK, the internet – although increasingly a factor in the marketplace – has yet to make sufficient difference for them to change the main focus of the business: in-branch retailing.
“We have a web presence – but we don’t do it that well. The reason we started doing anything at all was because we were getting a lot of enquiries from customers about whether they could buy in bulk with us.
“For us, it was a necessity rather than real desire. And, as a result, we haven’t really driven it forward or progressed it. I’m not worried about it – we don’t have the structure in place to make it go beyond bulk buy.
We’d like to, but right now it’s not a priority. The priority is getting our branch offering right.
“We built the HPS business on the level of service that we offer to our customers through effective face-to-face relationships that are built on trust, something that I feel is hard to replicate over the internet.”
The rise of the HPS brand would suggest that Alec and his fellow directors are onto something. They opened their first four branches in 2001 and now operate 33 branches across the south-east. Now employing 182 staff, the original concept was to deliver a level of service that they felt was missing in the merchanting sector at the time.
“As a merchant you have to set your stall out in terms of what you stand for. If you think you can be there purely to make profit, it might not work out. We started out to provide a service that we thought was lacking at a time. Having all worked for nationals, we set up HPS thinking that we could do it different – if not better.
“We opened four branches in 2001 then we opened another four in 2002. We went back to our roots and employed people we knew would give us an instant lift – we trusted them and they trusted us. It was all about the people rather than locations.”
Working with a flexible model
The aim to deliver industry-leading levels of service has ensured that the focus of the business has remained on its branches – and branch staff.
The size of the business gives it potentially more flexibility than some of its competitors and also allows it to be very selective in how it works. For example, branch managers have significant control over how their particular branch operates – in relation to aspects such as price, stock, etc.
“One of the advantages for us being the size we are and employing the type of people we do is that we are able to give our managers licence to get on with it.
“Apart from our set products, we let new managers in new branches to choose a lot of their own stock because we value the local knowledge. There’s no point us dictating he has to sell boiler X, if he is telling us that installers in that area like boiler Y. And if we don’t listen, what was the point in hiring an expert?”
Bathroom showrooms is a prime example of how this approach has worked well for HPS. The first one was only introduced into a branch because the new manager wanted one. It proved a success and now there are ten across the network.
Keeping an ear to the ground
The constant contact with plumbers and heating engineers also provides the perfect opportunity to keep on track with the latest industry developments – for example, the products that everyone is talking about. The branch staff are able to identify opportunities for the business but also offer a better service to its customers – something that they wouldn’t be able to do if they were trading solely online.
“I always have this rule of thumb – if two different people come into a branch of HPS and ask for the same item, we have it on the shelf the next day. We have to respond to trends – and branch managers have that flexibility to pick and choose for themselves based on customer feedback. This is something that we can offer because we’re small enough and flexible enough. Some of our competitors might not have that advantage.”
With the majority of HPS customers being sole traders, being able to meet their needs – which are undoubtedly diverse as their day-to-day work changes – is paramount. Sole traders have to be looked after properly because problems with stock etc can have huge implications for them. And, in an increasingly competitive market, there are plenty of alternatives.
Asking the question
For Alec, it’s essential that every customer that comes into a branch is asked the right questions to make sure they leave with everything they want and need to do the job they are working on. The reality is that it’s easy to forget something and having to make a return visit is annoying for everyone.
“At HPS, sole traders are our lifeblood, and the better merchants will be the ones that provide the right level of service – they will be successful. Of course, your prices need to be there or thereabouts, but I like to think that customers don’t just choose solely on costs.
“Our business is about people – whether that’s our own staff or our customers. If you don’t understand that, you will struggle in this industry.
“I think there’ll always be a need for merchants – and I’m not just saying that because it’s my business. There’s a role for us, and that role is different for different customers so we need to be able to react accordingly.
“I refuse to accept that having local merchant branches is no longer key to our customers.”