9 April 2010

A Head in the game

The purchase of Allied-Kingswood by Michael Head's Crown Products comes at a very interesting time in KBB-Land.

I've quoted the old Chinese curse of "May you live in interesting times" on several occasions in the past, but I'm hard pressed to think of a more 'interesting' time in the kitchen market than the one we are living through at the moment.

A couple of weeks ago, the KBB sector came together at kbb Birmingham and it was pretty obvious that the mood had changed from looking over our collective shoulders to see where the next blow was coming from, to looking forward to the challenges and opportunities that lay ahead.

Earlier this week, the election date was announced and one could almost sense the relief that the uncertainty was over, even if the outcome is anything but certain.

In the general scheme of things, a kitchen furniture manufacturer buying a distributor is pretty small beer compared with the affairs of state. But the move by Michael Head's Crown Products to buy its largest distributor does say a lot about the state of the kitchen market in the UK.

For Crown (to take a leaf out the Marks & Sparks ad), is no ordinary kitchen company, it is the leading kitchen company in the UK's independent sector and anything it does has pretty important repercussions for the sector as a whole.

In Michael Head, Crown Products has one of the shrewdest operators of any business, so there is certain to be a very sound move behind this development, just as there is bound to be a sound reason for inviting Stephen Joseph, the former managing director of the Allied back to the company.

If you look at the wider picture, it seems that the kitchen market is starting to polarise. The middle market is coming under pressure as some kitchen consumers who want 'the look' are heading towards B&Q and IKEA where the look if not the quality of the middle market is available with an apparently lower price point.

The survival of the independent sector is probably going to be more service-based than exclusive product based in future.

The distributor, sometimes dismissed as a mere middleman, is going to play a very important role in future independent business as the 'one-stop-shop' a distributor can offer becomes even more attractive to margin-squeezed retailers.

UK distributors will become more like the buying groups of Germany that are frequently said to be one of the main reasons that the German middle-market has remained strong. (There are other reasons too, but that's another blog.)

By acquiring the Allied, Michael Head has guaranteed a strong position for Crown's furniture the kitchen table of tomorrow.

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