Editorial: True Believers
The question almost always comes up when PHCP wholesalers gather for business or social reasons: “Can the independent wholesaler survive?” Wholesalers talk about it more than the weather.
Thus, it qualifies as something of a man-bites-dog story to report that the question never arose in two days and nights of conversation with wholesalers attending the spring membership meeting of Omni Corporate Services, held in La Quinta, Calif., last Feb. 1-3. It would have been as out of place as someone asking “Does God exist?” at a Vatican conclave.
The scores of wholesalers I engaged in conversation there not only expressed confidence in their future, many were downright cocky about it. “I LOVE competing against the big chains!” said one Omni member from a small Midwestern town. Chimed in another at the same luncheon table: “It takes me three seconds to make a decision their people wrestle with for days or weeks. With the giants, important issues get bucked up the layers of management until someone gets the nerve to stick his neck out and make a decision.”
The big chains served as a punching bag in almost every conversation: “Their service is terrible … all they have to offer is price… they don't have their act together.” I wondered if Gulliver endured the same kind of trash talk from the Lilliputians.
It was an interesting contrast to so much negativity and inferiority complexes that otherwise pervade the industry. I've had more than one wholesaler tell me he wished one of the big firms would make him an offer, but nobody has. One has to wonder whether there's something about that kind of thinking that contributes to the unsaleable condition of a supply business.
A buying group meeting has an atmosphere conducive to optimism. The main purpose is to bring selected vendors and wholesalers together. From the vendor's perspective, sales leads just don't get any better than this. Peer pressure and economic incentives provide compelling reasons for wholesaler members to do business with the vendors present, and the vendors are predisposed to treat even the smallest wholesaler as someone important.
This Omni meeting drew a record turnout of some 875 participants, representing 180 member firms and 105 vendors. Attendance got a big boost from a clever “Frequent Buyer Incentive Program” devised by Omni. It took me awhile to understand that all those people wearing “FBI” ribbons weren't protecting us from al Qaeda. They identified the scores of vendors acknowledged for their support of this program, which encouraged added participation with the vendors as well as an incentive for the membership to bring along additional company personnel.
The FBI program applies strictly to the year's big membership gathering. Members who don't attend don't benefit. That's a powerful incentive to show up. What's in it for the vendors? A way to enhance turnout and thereby more opportunity to talk with purchasing decision makers. Win-win.
It's hard to say if the same mood prevails at other buying group meetings, because Omni is the only one that allows the trade press to attend. But I suspect it does.
One member told me flat out that he feels his future is bright precisely because of belonging to Omni. It's a sentiment shared by wholesalers belonging to other buying groups as well. These organizations go a long way toward leveling the playing field between the giants and comparatively low-volume distributors.
So much so that it's a wonder why one hears, “Can the independents survive?” so frequently in other forums. People apparently gain confidence and psychological reinforcement from their peers. Buying groups have selective membership criteria. Most members don't compete against one another. Where they do, it's because an existing member gave the okay to accept a friendly colleague.
For this observer, attending my first buying group meeting, it was a pause that refreshes. Nobody had to twist my arm to spend a few days in the California desert in the dead of winter, but even more enjoyable was basking in the company of wholesalers who exude confidence about their role in the industry and their future as business owners. You'll be reading about some of these folks in future issues, because there are stories galore out there of independent wholesalers not only surviving, but thriving.
It's undeniable that this industry has been substantially consolidated over the last couple of decades. Some believe it will become even more so in years to come. But as long as the buying groups exist, there remains hope for small independent PHCP wholesalers to fill product and geographical niches just about everywhere you look across the land.