REH moat, page-128

Hi MarsC, happy to elaborate.

Reece’s raise their prices on a monthly basis and it’s known by plumbers and also their own staff as “reece creep”.

They used to have white board A frame signs at the trade counter all stores that would say things like. ‘7% increase on all pvc products’, or copper, you get the idea. This price rise would be blanketed across all trade accounts. They no longer hav3 the whiteboards but prices are always creeping up even after a trade account customer would have them locked in, as the store manager would say.

Most plumbers don’t have the time to check prices on a monthly basis on hundreds of different items they may use so it’s a constant game of cat and mouse. Kudos to Reece for doing this from a business perspective but when they are charging plumbers more for items than can be purchased by anyone from a local hardware, it can become awkward when presenting accounts of materials to a plumbers own customer, as well as limiting the plumbers own ability to make a margin.

Reece’s are generally more expensive on most items than other plumbing stores but I admit they do provide good service and have a very large network.

To answer your question, their competitors are not as aggressive on pricing increases and I’ve had much better success in getting pricing structures locked in for longer times with much lower pricing with suppliers who I have been using for 5 years verses reece at 20+. E.G. a very small plumbing business can make a weekly wage by quoting Reece prices but purchase their goods elsewhere.

All of this is wonderful for profits no doubt and reece are the leaders by a long long margin in what they do.
I’m not sure if it still happens but Mr Wilson (Alan), I believe would religiously be chauffeured around and visit all stores all of the time knowing his managers and staff by name. Regardless of plumbers gripes, that’s a good business and again, credit to the Wilson family for building a very successful company.

One only needs to look at the top 20 (or more..!!!) share holders to see that the Wilson family are incredibly ensconced in this company and I can’t see anything changing for a long time.

In short, reece don’t really have competition.

I could rant on about poorly managed stores of their competitors but anyone could walk into the competitor stores and measure it at a glance against ANY reece store and it’s chalk and cheese.

So yes, REH are a wonderful share to have, hold, sell, buy more and get rich of the ‘reece creep’.