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Customer Beware – consolidation is coming to a label printer near you.

By Helen Dugdale.
stuart-k

Stuart Kellock explains that while many other label printers are selling out, Label Apeel is staying put.

The big guns are everywhere, but were not playing ball

It seems every week we hear of another competitor being bought up by a multi-national organisation that is moving into the label market.

Whatever the reason for the sale, these companies should be congratulated. They have worked hard building fantastic relationships, providing superb quality products with a great service. They have cornered their part of the market and the business has matured into something that somebody else is willing to pay handsomely for.

But what happens to those businesses once the owner has left and booked the first of many Mediterranean cruises? Can a large corporation maintain the same level of personality, commitment and integrity that the family business or owner manager can?

Why do large corporations feel the need to buy up smaller companies?

Let me tell you a story. For the sake of this analysis I am going to name the worldwide corporation LexCorp and the small label printer BobsLabs.

Why does LexCorp covet BobsLabs. Why are they chasing for a buy out?

BobsLabs has probably six machines in various states of repair, a couple of newer shinier presses but the remainder will be older machines kept for specific reasons and in some instances specific customers. LexCorp will have hundreds of machines spread across the globe, it will have purchasing agreements with all the machine manufacturers that means it can get a new machine with the click of its fingers. Based on that it is safe to assume they are not doing it for capacity. Without a doubt BobsLabs will have a level of expertise in specific skills, the nature of smaller businesses that are growing is that they know how to adapt and learn very quickly.

It is worth their while to get very good at specific skills that larger organisations would struggle to adopt. So maybe LexCorp is after these skills, why bother building a cohesive learning environment when you can buy these skills in. That for me would be a great reason to buy another business, but the evidence suggests that this also is not the case for buying. In many of the consolidations we have seen, the company is swallowed up, the factory shut down and the vast majority of the skilled work force abandoned.

So, what can the reason be? In my opinion the reason is twofold. First, LexCorp is a plc. It has to show growth year on year. BobsLabs £10-£15 million pound turnover helps to feed that hungry machine, this year! The second is the sheer irritation value BobsLabs has for the mighty LexCorp.

LexCorp has more purchasing power by a country mile, it has more capacity than BobsLabs could ever dream of and it has a sales and marketing team bigger than all of BobsLab's employees put together. The only thing it is missing is agility and personality. If BobsLab's customers want a quick turnaround or need a technically tough solution then they get it and they get it through a meeting with someone who is close to the solution and a hearty smile from people they know and trust.

LexCorp struggle to offer this level of service, the customer is a number in a process that moves at a speed governed not by demand but by the financial constriction of a multinational business.

Every customer is important to BobsLabs; he needs everyone happy and returning. In an organisation of £500,000,000 turnover only a very select few customers can claim to have any real influence and they tend to also be multinational plcs. 

So, rather than leaving BobsLabs out there as a mild irritant constantly muddying the water LexCorp snaps it up, with promises to customers about things continuing the same and no significant changes. At first they are good to their word but slowly overtime every large multinational looks for savings and efficiencies. Soon those efficiencies escalate in to a removal of the personality and the independence and before time the customer becomes the number in the machine “Come in number 7 your time is up!”

Were not irritating enough

So yes, good luck and bon voyage to my fellow owner managers who take the corporate shilling you have more than earned the right. Yes, I am a little envious of your two ski holidays and the villa in Portugal, but no I will not be selling out anytime soon. Mainly because nobody wants me, apparently I am not irritating enough, a fact many of my employees, wife, kids, suppliers and hairdresser find surprising.

Also, because what we have to offer is so based on personality, agility, technical nous and good old-fashioned putting the customer first, that they would not know what to do with us.