Industry news

Why buying groups work

Smaller, specialist stores are growing in popularity in Europe. "A consumer doesn´t want to go to a big store to buy a specialist product because he knows that the product will most likely not be there and the service is also usually horrible… independent stores are more like family, normally also owned by people who participate in sport and who therefore understand the customer’s needs, says José Moreno-Tapia, manager running performance, Messe München GmbH, the organisers of the ispo Shows.

But, as independent store owners all over the world know, a single, smaller store has one huge disadvantage compared to chains: lack of muscle to negotiate good margins and premium product from suppliers. This is one of the main reasons for the growing popularity of buying groups in Europe.

"A group of independents forming a buying group are in a stronger position to negotiate better prices with the brands," explains Thomas Grenot, international manager of retailer relations for ispo. "They can join forces to communicate better, for example, and set up a central office for the payment of suppliers, even salaries ... they can also produce a catalogue for their customers. Together they have more power."

This need not require a daunting structure - not if the main purpose is to get the same competitive buying prices as the big stores by buying together. "In Europe they also exchange valuable information through seminars on new materials, new technologies, customer service, etc, says Moreno-Tapia.

"The buying group members need to enter into an official contract with all the members — but it doesn’t mean that they have to pay a fee," says Grenot. "You can imagine ten friends who each own one shop joining forces in order to get better prices, which they will get if they are buying for ten shops instead of one."

One of the arguments against buying groups has always been that this will result in independents all offering the same merchandise – even the same as the goods offered by chain stores and that they will lose their individual character.

A buying group does not, however, have to be as massive as the Intersport Group that has developed into ons of Europe’s biggest retail chains, says Moreno-Tapia. "It is important for everyone to maintain their identity. The rules must be worked out at the start so that the members can have some leeway to cater for their customers’ needs. "as a group they should keep a policy to warranty a healthy market not only for today but for tomorrow."

Besides, buying groups usually don’t have serveral retailers in the same city, in order to offer their members some exlusivity, otherwise they will all have the same offer, the same prices and they will all competing against each other – which is not good for them, adds Grenot.

Members of a buying group can also save costs by clubbing together and sending representatives to international shows where they can make contact with other retail groups.

Moreno-Tapia is, for instance, planning an International Running Forum for ispo Winter 08, to which he wants to attract as many international running specialist retailers – including buying groups, as possible.

"At the running forum, they will, for instance be able to make contact with the German running specialist stores association, the Lex Group," says Moreno-Tapia. "Stores will have the chance to present their own situation in their countries under the Lex Group analysis. They will also see the reference brands on the international scene as well as the new trends coming."

Euretco, an industry organisation from Holland, will also be present to explain why they have been working together as a group. They co-operate closely with the Lex Group.

Ispo is prepared to contribute towards certain costs, for instance hotel accommodation, of delegates attending the Running Forum.

At shows like ispo you get an overview of new trends, new fibers and textile, the new colours "as it is the center of the sport market," adds Grenot. "Retailers can meet other retailers from all over the world and see new brands, and new sports like floorball at ispo Sport&Style 07."