Thank you @madamswer for your comprehensive analysis of Reece's competitive moats. All of the points that you raised are useful not just for new shareholders of Reece, but also for long-term shareholders as reminders about what makes our REH exceptionally unique in the ASX.
I recently had a dealing with a plumber who came to my property to fix some serious water problems in my backyard. The plumber had to install some new pipes and a pit. A two-minute phone call to his account manager was all that is needed to have the required supplies delivered to my property from the closest Reece branch within an hour.
When the delivery driver came, he took a picture of my plumber and the delivered goods as proof of delivery. There was no need for signature or anything like that. The picture on the driver's smartphone is the proof of delivery.
This is just one example of how hard Reece tries to work for its customers. By being easy to work with, its customers continue to prefer to buy supplies from Reece.
Incidentally, the plumber also said that he could get German-made pipes cheaper from Reece than Chinese-made equivalents from other suppliers.
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Reece's vast network of stores is also a source of competitive strength. No matter which suburb the plumber's job is in, there is likely to be a Reece store nearby, at most only a 10-15 minutes drive away.
Although replicating this network is not impossible, in my honest opinion, it's quite close to impossible in reality.
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On a separate occasion, we also recently purchased a toilet suite from Reece. The brand that we purchased was one of the brands that is sold exclusively in Reece. No matter how much we try, there was simply no room for bargaining at all.
The only way to get it cheaper is by buying it through a plumber who has an account with Reece.
This is another form of Reece's many moats. By signing world's various exclusive brands, Reece is able to charge premium prices without having to worry about price matching and/or discounting.
And by only giving discounts to its account customers, Reece is also making its loyal customers, the plumbers, even more loyal.
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Reece's customer service and sales experience are also years apart from the competition. Going to the Bathroom Life showroom feels like going to a fancy five-star hotel lobby.
A number of staff greeted us and offered to assist as we walk about looking at the display units. None of them was very pushy. The staff that eventually served us was also very helpful, accommodating and efficient. She did everything that she promised to do.
When we picked up the goods from the warehouse, the service that we received from the warehouse staff was also pleasant. The warehouse staff were friendly and efficient.
They made the whole buying experience such an enjoyable one that customers unconsciously lower their guard and adjust their expectations such that they are more agreeable to paying full price for quality products and services.
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Reece becomes a company that has so many close to insurmountable moats because of the stewardship of the Wilson family. Without their leadership, Reece would have become just another unremarkable wholesaler of plumbing supplies.
I sleep well at night knowing that:
- The Wilsons have very good genes, i.e. they seem to be able to stay healthy right into their old age
- The CEO is still young and yet already has years of experience
- They manage the capital of the company conservatively
- Their interests are aligned with ours
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In my opinion, REH's moats are thicker and taller and stronger than those of ARB, CSL, RHC, DLX, NCK, RWC or others.
Bunnings is probably the one company that has comparable moats as REH.
REH Price at posting:
$42.20 Sentiment: Hold Disclosure: Held
(20min delay)
