THE BIG INTERVIEW: Performance Health on a mission to reaffirm market position

Ian Thomas Performance Health MD

As one of the leading mobility suppliers in the UK, Performance Health spreads itself across a range of channels and as the market evolves it will continue to broaden its scope. However, mobility retailers remain absolutely core to the company’s UK business and managing director Ian Thomas explains how it is working to boost dealer support and reaffirm its position as a reliable supplier.

You serve several different channels in the UK. How important are mobility retailers to the business?

The NHS is a large part of the business and we also sell to pharmacy chains and directly to physiotherapy and OT clinics. We sell to around 800 mobility retailers in the UK, which is an important part of our business. That number fluctuates all the time as some open and others close. In terms of size, financially, mobility retailers would be a smaller proportion of our business than they used to be a number of years ago. Part of that is because of the type of product that we sell — we no longer sell mobility scooters, beds or chairs. The products we sell to mobility dealers are mainly Aids for Daily Living.

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Some new dealers on the market are concentrating solely on high ticket items. But daily living aids are what tick a lot of mobility businesses over.

Exactly. One of the challenges for both mobility dealers and ourselves is that end-users are increasingly turning online for many of these products. There’s an old expression in business where you ‘follow the money’. So one of our major priorities and directions is to ensure that we can meet that consumer demand by having a presence in both areas.

Does that mean as your dealer network expands then a lot of them will be online retailers?

We serve both online and traditional bricks and mortar customers and will continue to do so.

Does the fluctuating market impact on yourselves?

Of course yes, it impacts on us. Because of the business we are, we don’t rely solely on one area — we have our pharmacy business, our hospital business, our retail business and our digital business. That allows us to balance our business across several different channels.

A lot of the retailers feel their market is becoming quite consolidated. What does it look like from your point of view?

I see it, yes. I think it’s becoming increasingly difficult for the small retailer to compete with the buying power and leverage that a larger chain has. How fast that consolidation is happening and whether it will continue is anyone’s guess. I do believe, however, that there will always be space for the small retailer that has the ability to differentiate in terms of customer service, product range and so on.

All suppliers want dealers than can deliver volume for them. But what else do you look for in a retail partner?

The obvious things, like how they manage their business from a business ethics point of view. Do they, for example follow the BHTA Code of Practice? We also have to look at how financially stable they are. Beyond that I think it’s what the retailer is offering and how they are offering it. While we don’t have a dedicated sales force that visits every single retailer in the UK, for the larger retail chains we do have a dedicated account manager. What we have for the smaller retailers is an Inside Sales Team and they will look after a number of those businesses in their territory. I think that’s right for both sides because for the smaller dealers, they’ve got the value of someone they can talk to regularly and they can call us if they’ve got a query. And at the same time, they don’t have the problem of a sales rep coming in and taking an hour of their time. With the smaller ones, you could have one or two people in the store and if there’s a customer in there the last thing they want is a sales rep hanging around. We believe we can offer a far better service to our smaller retailers through our Inside Sales team.

You transitioned from Patterson Medical to Performance Health recently. What has that meant for business and your partners?

If you take the history of Patterson Medical in the UK, it goes back to a company called Homecraft just after the Second World War. Patterson Medical was primarily a speciality distributor for mobility. We still are that, but we now also have an arm of the company which is a series of retail brands, which means we are now both a distributor and a manufacturer. Many of the products we are distributing have an increasing retail focus. Yes we can sell many of our own products to mobility retailers, but we also sell those same products through pharmacy chains like Boots or Lloyds, for example. The company has definitely changed and it’s given us a broader offering and allows us to operate in different parts of the mobility and rehab space. But it doesn’t mean we’re moving away from our traditional customers, we’re just adding to our offering.

Is it important for suppliers to maintain diversity in the market when it’s changing so much?

Yes. It goes back a little bit to ‘following the money’. The NHS is not necessarily providing as many mobility products when the patient is discharged and patients are now often told that they need to go and buy those products themselves. Those patients will either go to a mobility dealer or they’ll buy online.

Your business in particular, which sells mostly daily living aids, must be better suited to this trend, given that larger items like mobility scooters tend to be assessment-based products.

Correct. We have very few, if any, products where there is a requirement for assessment. Our products are the types of items that lend themselves more to a simple buying decision, where you don’t necessarily need to have an expert to tell you to buy a reacher, for example. There may be an element there, but compared to a lift or a hoist or wheelchair, there isn’t the same level of intervention required.

Is there any scope for Performance Health moving into those high-ticket areas?

No, there isn’t. It’s an area we’ve been involved with in the past, but we exited that business five years ago.

What kind of support do you offer dealers partners?

For the majority of dealers, it is the individual account manager support that is one of the main benefits. If there’s a specific issue, we’ll have one of our sales team go out and deal with it if it’s not something we can solve by phone or email. 95% of issues we can resolve by phone or email. I’ve done it myself and I have relationships with quite a few smaller retailers because it’s been built up over the years.

Chatting to smaller retailers, they sometimes express frustration at trying to contact and deal with larger suppliers. It seems very important to have that dedicated support of account managers.

Formerly, you had sales reps who had a territory and were driving around to see their retailers. There is a transition when you move from field-based support to office-based support and our challenge is to make sure that we manage that relationship as well as we can. The customer can and should know their account manager, and they can and should be able to reach them either by phone or individual emails. It’s not a call centre, it’s much more individualised than that.

You have a large operation and warehouse centre in Nottinghamshire right next to the M1. What does that mean for lead times?

Normally, our customer promise for the last few years has been three day delivery. Typically, we do much better than that. Up until a few months ago when we put our new ERP system in, we would usually deliver about 85% of products the following day, and 99% within three days. We have had some difficulties over the past couple of months since we put a new system in place, like many companies have experienced. There has been disruption for some of our customers as a part of that. Fortunately we’re coming out of that now and in the next couple of months we’ll be a very reliable supplier again and meeting our customer promise.

Looking more broadly at the sector, there are a lot of challenges for international businesses regarding exchange rates. What kind of challenges have you experienced?

Most companies supplying this sector have international dealings and there are relatively few specialist companies that supply UK-only manufactured product. A lot of those products will come from China. There are a number of issues with sourcing from China. One is the longer lead times, which we need to manage, but we’ve been doing this for a long time so we can manage that pretty well. Currency fluctuation is the second thing. It goes both ways of course. It’s been relatively volatile over the last few years. Companies buy from China in US dollars, typically. The last thing is Chinese inflation. Because China is a developing country, inflation is higher than it’s been and that is impacting costs. The Chinese government over the last year has also become much more focused on ensuring Chinese companies meet their environmental standards very rigidly and that’s adding cost to the Chinese manufacturers. So yes, there has been pressure on costs. As a large company, we can sometimes, but not always mitigate some of that because of our ability to buy in bulk.

Although international trading has been tough over the last few years, you’ve still managed to consistently improve your operating profit.

I think that’s down to basic business. It’s managing your costs. There’s a balance to strike between ensuring your prices are competitive, but you also need to make a profit to pay your costs because wage inflation still increases in the UK. People still expect a pay increase every year and that’s something we have to build into our forecasting. It’s about rigid cost management.

Why do you think dealers choose Performance Health when they’re looking for a supplier of daily living aids?

There are probably three answers to that. Most dealers who have been in the business for a long time will have been customers of ours at some point and so hopefully they trust us. Secondly is the broad product portfolio. We have a much larger offering than many companies do, which helps. The other thing is that we have had a reputation as a very reliable supplier. If we say we will get it to you then we will get it to you. Yes, we have had some difficulties over the last couple of months, but we’re now pretty much through that and the plan is to build that trust back with customers.

What role will dealers have as the company moves forward in the next year?

Mobility dealers in the UK will remain a core customer for us. They are by number certainly one of our biggest customers alongside clinics and they will remain a core business for us. I think there are challenges with the particular portfolio of products that we supply to dealers because there’s a far smaller trend for products such as wheelchairs and other assessment-based products to go online than there is for some of the products we supply. I think it’s striking the balance of being able to supply both channels. We can’t ignore either, we can only balance and make sure we have the right offering in both cases. That’s something that any business has to do.

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Joe Peskett

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