Crabtree & Evelyn wrote to retailers a few days ago announcing the imminent closure of their Australian wholesale business. It came as a surprise to plenty of customers, including newsagents, gift shops and independent pharmacies. Crabtree & Evelyn is a solid brand, well recognised and appealing to a valuable demographic.
This move is one of many recently by suppliers, retreating or trimming operations in light of challenges in retail and allied areas.
I think 2019 will see more suppliers dealing from a head office, with less investment in field representation – especially in dealing with small business accounts.
As I noted here a few months ago, representation is expensive, especially compared to being able to deal with a national account that covers hundreds of locations. Here is what I wrote about the cost of reps min the road.
A rep on the road has a cost to the business of around $100,000 made up of salary, maintained vehicle, on-costs such as work cover, insurance and related as well as any incentive for performance.
A rep is on the road, on average, forty weeks of the year allowing for annual leave, other leave, training, meetings and times when retailers don’t want to see any reps. While the 40 is a generous number, let’s go with it.
Forty weeks is 200 working days, or 1,400 working hours after allowing for breaks.
A rep needs to earn at least $71.42 in gross profit per work hour to cover their costs to the business let alone other business costs.
However, reps and suppliers tell me that rep travel time accounts for around 30% of work hours. This takes the work hours in a year to 980. At 980 work hours a year, a rep needs to earn $102.05 in GP to cover just their cost to the business.
The reality is, given business overheads, the cost of a warehouse, marketing and other costs, a rep would need to earn between three and five times this in GP to cover the business costs.
While not ubiquitous in the newsagency channel, the Crabtree & Evelyn is well represented.
So sad we have been a stockist for over 20 years and was an avid user of their products Unfortunately they lost their way deleting products we used to sell hundreds of and the new repackaging was a disaster so wasn’t too surprised. I’ve been told it’s a worldwide retreat from wholesale and retail shops to online only but I doubt that will stay long.
Jon — correct this is not an Australian issue, it is worldwide.
As you rightly point out, under new owners C&E pursued a policy of ditching old product lines people loved and introducing new fragrances nobody wanted. The random approach to packaging made the issue worse. If that wasn’t enough, the owners were fixated with changing their software systems, whilst outlets just wanted stock.
To add insult to injury, C&E periodically dumped stock on the market via the internet, to the consternation of Australian management, and denied knowing where it originated from.
It is no longer a trusted brand, the last 2 Hong Kong owners have completely trashed it. Canada has already filed for bankruptcy, expect the rest to follow. No knights in shining armour for this one.