Distriparts price increase

Re: Distriparts price increase

The text as below I’ve sent to one or two fellow Service Force agents, as well as to Distriparts UK. I may as well copy to the outside world as it will probably be forwarded anyway someday in the future.

Of course to maintain the balance if I receive a constructive & convincing reply from Distriparts, I will post relevant facts in the true spirit of debate and democracy.

I will put in my twopennorth shortly to be increased to 3p.

I can only agree with the comments as below, and for what I feel is good reason.

Take a look at the retail price index, currently running at below 2{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d}. Add to that the rate of prices you see increasing for your weekly shopping in your local Tesco etc, nowhere near these levels. Plus the retail cost of appliances in the high street is still falling.

Now look the the cost of raw materials.

If the issue is global, why don’t the prices of the end product, being the appliance as a whole, reflect this?

I have a good contact who is based in Italy and his job is to source raw materials from all over Europe for a major player in the domestic white goods industry. He spends most of his time looking at suppliers & where he can make savings, that’s his job. The last time I saw him he was about to fly to Estonia, recently he has been to Poland as well as a few more countries from the old Eastern Bloc. He tells me he is saving on wiring looms and the group is about to outsource from these areas. He is also looking at South America and China for steel & copper. For these reasons, I’m reliably informed there is not a raw materials issue.

Take a look at the spares industry as a whole in the u.k and their pricing regime. When we were Merloni agents we enjoyed 1 price change in 3 years. When we were Candy agents, there was an update annually, with very little change and only on some parts. In the days of being Philco agents, there was no price increase fo 4 years. All these products are under Italian ownership.

Distriparts competitors, i.e. Electrue/Connections. They are now in the repairs market place and can see for themseves the state of play regards materials cost. Therefore, they are painfully aware when one player in the industry is bucking the trend and unrealistically increasing prices. I’m sure they have the power to buy straight out of Italy, and they will if they don’t already, as I believe they used to with Philco.

Now look at the future, we are pricing ourselves out of the market. You get a bottom of the range Tricity Bendix in Currys now for about £200. How long is it going to be before the cost to fit an ordinary door seal is going to hit this level? This sort of thing will eventually filter down to the insurers, they will need to pitch their premium levels at a position to make the insurance viable, but who will pay for it? We are already close to insurance prices equalling the purchase price of the product.

We are struggling to keep our chargeable customers and I feel unrealistic spares prices will add further nails to our coffins. I personally fail to see why there has to be increases as frequent and at the rates that has happened over the last few years. We saw an increase in February and now the proposed hike of another 5{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d}, this will be 5{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} on top of the previous increase.

People will vote with their feet, in fact they already are. A price increase to us leaves us with less room to be flexible with a customer in order to capture the business. We have to recoup our costs as well as our prospective losses, we are at the a** end of this industry and once again we are about to be hit by prices.

All this is only an opinion, and I must add My opinion. However, I’m sure I speak for others in the trade.

Alex

Re: Distriparts price increase

Well it looks as if the reason for Distri’s price increase has become clear and it has nothing to do with the service guys really or what they do, to quote one of the financial pundits…

Chief Executive Hans Straaberg last month said earnings will drop more than previously forecast as steel prices have more than doubled this year, inflating costs for making refrigerators, stoves and washing machines.

At the same time, the owner of the Frigidaire brand is struggling with sluggish consumer demand amid record European unemployment levels.

Operating profit this year will fall “significantly” compared with an earlier forecast of a “slight” decline, the company said. Pretax profit in the period fell 27 per cent to 944 million kronor (US$129 million).

The shares were down 1.50 kronor (21 US cents), or 1.2 per cent, to 128 as of 9:02 am in Stockholm. The stock declined 8.1 per cent in a day last month on the outlook for full-year profit and has shed 19 per cent in 2004.

As costs rise by 1.2 billion kronor (US$164 million) in the second half – driven partly by increased demand in China – earnings will be cut by 500 million kronor (US$68.5 million), Straaberg said in September. Before that, he had forecast that annual profit before interest, taxes and one-time items would drop less than 10 per cent.

The company, which has eliminated about 5,000 jobs over two years, is paring costs in response. Electrolux aims to save some 700 million kronor (US$95.9 million) by reducing expenses and raising prices. Analysts say that may be difficult as competitors such as Maytag Corp and Whirlpool Corp vie to offload inventories in the face of sluggish consumer spending.

“We see few attractions at this juncture,” Patrick Marshall, an analyst at Credit Suisse First Boston in London with an “underperform” recommendation on Electrolux, wrote in a note to clients before the earnings were released. “Industry pricing simply has to improve significantly” for companies to be able to meet profit goals, he said.

Metal and energy prices have soared as China, the world’s largest consumer of copper, aluminum and coal, helps fuel the fastest global growth in three decades. Higher prices for metals and oil contributed to the fastest annual gain in three years in German producer prices in September.

So the stock on your shelves is going to be costing you more because the prices to the manufacturer has increased, especially oil and steel in this instance.

Now it strikes me that, since oil prices have also a direct affect on our profitability that we should also be allowed to increase our prices in line with external factors, after all if it’s good enough for a multi-national billion dollar corporation like Electrolux then it’s got to be good enough for us to employ the same tactic. Oh, that’s right, we get told to behave and that the price is on offer is the price, take it or leave it. Well, in that case maybe we should just subtract the equivilent amount in percentage points from our Distri spares bill every month and say, “well that’s what we’ll pay, take it or leave it”.

Two sets of rules… never works.

K.