Wholesaler PBS Deutschland and leading dealer group Soennecken have raised a few eyebrows in Germany with their newly-announced strategic partnership
PBS Deutschland, the German arm of European wholesaler PBS Holding, and Soennecken, Germany’s number one dealer group, announced a long-term strategic partnership in October.
The agreement sees two of the major players in the German market move closer together as Soennecken looks to up its service capabilities across its whole membership.
The partnership is centred around approximately 300 Soennecken members that have largely retail operations.
Traditionally Soennecken, which is run as a cooperative, has been used to handling its own business with members, and has forged very strong links with manufacturers and distributors in a market where direct purchases still account for around 50 percent of sales and reliance on wholesalers is less pronounced than in other countries.
About 18 months ago Soennecken initiated a project to develop a better product and service offering for its retail-oriented members. These retailers have less of a need for the traditional office products range that form the backbone of Soennecken’s LogServe products and logistics offering. Therefore, the dealer group implemented a category management strategy in cooperation with manufacturers and four wholesalers – one of which was PBS Deutschland – to better serve these members in terms of social stationery and seasonal products.
As PBS Holding Managing Director, Richard Scharmann, explains: "After about six months, Soennecken had around 20 dealers on this programme and we were servicing most of those. It soon became clear that Soennecken itself did not have the strength of its own field organisation, nor the ability to add another 15,000-20,000 SKUs to LogServe, and that it needed a strong partner going forward."
Scharmann says that PBS Deutschland’s experience in running its own category management programmes, its strong field presence and robust and flexible IT systems soon led to the two companies getting together to see how they could develop their partnership, culminating in October’s strategic partnership announcement.
It was not all plain sailing to reach an agreement. There are a number of areas where PBS and Soennecken are, in fact, competitors, notably PBS’s Alka wholesaling arm in Germany which serves dealers that go head to head with Soennecken’s own members, and in Austria, where PBS has its own end-user B2B business.
Quite simply, those areas of competition have just been cut out of the equation in terms of the strategic partnership, which officially starts in January. Therefore, traditional office products do not form part of the agreement. The dealer group’s members will still continue to order those via the LogServe platform, unless there are special low-quantity replenishments where it is more sensible to go through the wholesaler. PBS Deutschland has integrated its own ordering system into LogServe for the retailers to be able to order the broader range of social stationery, Back-To-School and seasonal items via their normal ordering procedures, only they will be delivered by PBS.
Scharmann says that his 35-strong field rep team in Germany will then handle the category management with the individual retailers on a day-to-day basis, providing a higher level of service than would have been previously possible.
So far, around 100 of Soennecken’s larger retail members have been earmarked to benefit from this enhanced category management offering and Scharmann estimates that it will take up to two years to fully roll out the service.
After that, who knows? Scharmann certainly does not rule out the possibility of further cooperation between the two companies.
He says news of this current agreement provoked a mixed reaction in the German market. "Two big players coming together like this is bound to make waves," he said.
"Dealers are generally positive about the possibility of a single-source, full-service offering, while traditional, smaller wholesalers are concerned because this agreement will add pressure onto them and we may well see further consolidation in this area of the market."
The partnership is certainly another sign of Soennecken’s willingness to adapt to an evolving market following its recent decision to implement a direct-to-end-user programme targeting large corporate accounts. It will also allow it to focus more on driving sales though its LogServe platform without neglecting its retail members.
And, of course, it’s a good deal for PBS Deutschland which will now be able to do business with a sizeable chunk of Soennecken’s membership.