Following weeks of speculation and a formal consultation process at the wider Exertis UK business under owner Aurelius, evo Group confirmed at the end of January that it has agreed to acquire Exertis Supplies’ stock and trade.
Despite a ‘no frills’ approach to wholesaling that was applauded by suppliers and customers, Exertis Supplies was a loss-making operation – and Aurelius clearly felt it was not worth attempting to turn it around.
With its main direct competitor gone, the spotlight is now firmly on evo’s VOW Wholesale. Immediate questions revolve around stock availability and service levels, with longer-term concerns centred on a reduction of competition in the wholesaling channel.
VOW Wholesale Managing Director Adrian Butler said he understood the anxiety created by the situation, describing it as a moment when the industry would judge participants less on messaging and more on delivery.
“It’s a time to do the right thing,” he told Workplace360, stressing that VOW has learned lessons following the collapse of Spicers in 2020 – and will not take it for granted that Exertis volumes will automatically migrate across.
Today, Butler argued, VOW and evo are structurally and culturally different from the business of six years ago, with a stronger emphasis on long-term partnerships and shared outcomes. He described a “real cultural change” at the group since its management buyout last year and said leadership is aligned around ensuring VOW’s customers can compete profitably.
It could be argued that the rise of Exertis Supplies post-Spicers was of VOW’s making. As Advantia Managing Director Steve Carter noted, the distributor found itself elevated to the number two position almost overnight, “whether it wanted to be there or not”, to accommodate an influx of dealers.
Advantia was one of two dealer groups closely aligned with Exertis. Carter confirmed a contingency plan had involved working with the team at VOW to structure an arrangement, which is now in place. “We are now working together to enhance and maximise the potential of what has been agreed,” he added.
At Superstat, Managing Director Alex Dunn said the recent developments have given the group and its members “a chance to adapt and move forward”.
“They have also helped us strengthen partnerships and simplify our supply network,” he noted, reporting that “solid foundations” are now in place.
Capacity planning
A key test will be whether VOW can absorb additional demand without disrupting service levels. Butler said the company had been planning for the transition for several weeks, focusing on warehouse capacity, delivery capability and stock positioning.
Operationally, VOW has freed up capacity at its Lutterworth facility by shifting some pick volume for other evo companies to Normanton. At the same time, it has increased staffing levels in warehousing and transport, including extra drivers across its hub network.
Butler confirmed that 26 former Exertis Supplies employees transferred across to evo on Day 1. Those in sales roles at VOW are being aligned to their previous customer relationships where that makes sense, he confirmed, often following requests from dealers.
He also acknowledged that some resellers may be cautious about relying too heavily on a single wholesaler and will naturally look to spread risk by fragmenting purchases. His response to this is that VOW must “earn its stripes” by delivering consistently.
On the flipside, he argued, dealers that want a wholesaler capable of investing in categories, technology and delivery capability also need to recognise the value of scale in supporting that model. The underlying market reality, he noted, is that the “traditional space” has shrunk to the point where supporting multiple national wholesalers is no longer viable.
Other sources
Alternative sourcing options include Plymouth-based JGBM. Managing Director John George said the company has been implementing an ongoing brand and category expansion for several years – with many of its existing partners having a significant OP portfolio rather than being tech-centric.
He stated: “The recent demise of Exertis Supplies has been a catalyst for accelerating that expansion, in terms of both considering a broader category range and managing significant interest from OP brands and the dealer community. Our objective over the coming weeks and months is to move swiftly in providing our customers and new suppliers with an equally robust product and service offer.”
CTS Wholesale has also been seeing a “significant increase in demand” over the past few weeks, adding almost 90 new accounts. Head of Sales and Marketing Mark Allan admitted the level and speed of change have “placed pressure on the business”, but that it has reallocated team members across departments to ensure service levels are maintained.
He told W360: “Our focus now is on stabilising operations […] and reviewing our product range to ensure it aligns with the evolving needs of dealers and their customers. We will also continue progressing our expansion plans and, most importantly, remain fully committed to supporting the dealer channel.”
Finding the right balance
Even prior to the Exertis situation, W360 was aware of ‘noise’ in supplier circles as new evo Buying Director John White initiated a fresh round of negotiations. Asked whether the addition of the Exertis volume would see vendors invited back to the table, Butler asserted this is not the approach the group is taking.
Adding more colour, evo Group CEO Andrew Gale said it was a question of “balance and fair reward” across the value chain – allowing evo, its suppliers and customers to all trade profitably. He also pointed to the “controlled liquidation” of Exertis’ stock as something that mainly supports the supplier base – not a perfect solution, but one that avoids vendors taking large debt hits.
It is often said that developments in the UK business products industry resemble those in the US. Across the Atlantic, there has been a seismic shift in the past few months, with Essendant exiting the OP dealer channel.
Stakeholders have rallied behind ‘last man standing’ SP Richards, recognising the need for a viable and sustainable main wholesaler partner – with a ‘one is better than none’ mentality. Despite misgivings in some quarters, that is likely to be the way forward in the UK.
