When Super Broker' comes knocking on the door­ The world is getting smaller, but opportunities for brokerage will continue to grow ­ just so long as you can keep one step ahead of the rest Globalisation and the power of the internet are making the world a smaller place. So where does that leave brokerage, the traditional masters of the universe? One of the internet's most often quoted advantages is its ability to cut out the middleman ­ to bring producers and customers together and allow them to do business easily and cheaply at the touch of a button, crossing national and international boundaries. On one level, this is a threat to the broker's role. But according to Joe Sloan, group chairman of SHS (brokerage) and president of the European Sales and Marketing Association ­ writing an obituary to the broker would be extremely premature. Sloan says: "E-commerce is both an opportunity and a threat to brokers. The threat is more at an international level ­ for example, we've already seen Asda buying Procter & Gamble products from Germany." E-commerce and increasing movement of goods within the European Union are creating more options for retailers and suppliers alike. In the long-term, Sloan believes Europe will begin to mirror the US, where two or three brokerage companies now operate across the country, where once they worked by state. He also knows of at least two companies in the US with global ambitions. "They will turn to the likes of P&G and say We'll run Europe for you'. That's how big they are thinking. I think we'll see a couple of super brokers' emerge in Europe," Sloan says. "The difference is that e-commerce will significantly speed up that process. It took the US 50 years to get there; Europe may have to do it in five." He points out that the number of brands that are truly international and enjoy the same status in every country is actually very small. A brand leader in France can be marginal in the UK, and national, regional and local differences continue to apply. So what must brokers do to position themselves, if, as Sloan believes, their roles as importers and brand builders change? "Everything a broker does needs to add value," he says. "In my view there's an even bigger opportunity for brokers in the future, if they can adopt the technology and systems to give a first-class service." The best and worst of times Sloan fears for some of the smallest brokerage companies who may not have the resources to make the necessary investment. But many brokers will continue to play a vital role in the supply chain because ­ whatever the global multiples do ­ there is a whole raft of producers who will need their expertise. Sloan says: "Even while the major principals may want to run some brands themselves, they may want to put others out of house. And as far as the smaller, regional producers are concerned, the broker is always going to be hugely important. In today's world, I don't believe a company with a turnover of less than £50 million should have a sales force at all. "Between £50 million and £100 million they may want to run the national accounts themselves, but what about the independent and cash and carry sector? That still has to be managed by someone." For smaller companies that want to develop, the role of the broker is crucial ­ and that isn't going to change, says Sloan. He also sees the broker playing a major role in the burgeoning foodservice sector. UK brokerage companies are all too aware of the need to invest now or risk being left out in the cold by new business-to-business technologies. Nick Palmer, national sales manager for Independent Dairy Consortium (IDC), is convinced brokerage companies can live quite happily in the world of e-commerce and global mega-brands. IDC, supplier and trading partner to 150 small dairies, is already embracing the future. The company is working hard to establish itself as an electronic interface, giving independent suppliers access to technology which would otherwise be beyond them. Palmer explains: "Not long ago all the invoices were on paper. Now about 40 per cent are business-to-business via the internet. Smaller suppliers probably wouldn't have the opportunity to trade in that way if we weren't providing the service. We see a strong future on the interfacing side of our business." Neither Palmer nor IDC are overly concerned about global superbrands. Partly, this is due to the nature of the dairy industry, which has a strong tradition of support for locally and regional products. Palmer says: "One of our strengths is in the village or community type store, where people respond particularly well to the local theme." However, he adds: "We have also had talks with a major multiple about the possibility of supplying a locally produced milk that they can display alongside their main brand." Peter Steel, commercial director for McCurrach UK, claims that ­ as in so many other areas ­ a look across the Atlantic is needed to see how brokerage could position itself for the future in the UK. Steel says: "Brokerage in the States is far more developed, sitting right at the centre of the manufacturer/customer interface". The American model As trends in the US tend to be more cosmopolitan and ethnically diverse, store operators have always tailored store ranging and promotional activity on a local basis. According to Steel, this is where the broker comes into its own. "It means that manufacturers have to interface with multiple customers efficiently on many different levels. Although we don't have the same degree of stark demographic contrast, we are already seeing major multiples addressing this issue." Steel sees no conflict between the growth of global brands and the broker's ability to exploit local markets to their full potential. In fact, the two often go hand in hand. "Our brands include Walkers Crisps, Doritos, Campbell's soups, Guinness and Hellmann's, so we truly understand the needs of power brands'. "In essence, we are back to the old think global, act local' strategy," says Steel. "All these brands have to tailor their activity and draw on local knowledge to really maximise distribution and presence." As an example, Steel cites Guinness ­ a global brand if ever there was one. "We have demonstrated the advantage of local knowledge with Guinness, where sales in Scotland have grown by almost 65 per cent since McCurrach's appointment [Guinness Sales Figures 2000]." Gordon Lauder, joint managing director of Northamptonshire-based Central Foods Group, agrees with Steel that the UK brokerage industry is poised to follow the US model. "As more manufacturers trim costs, the trend will start to mirror the US, where brokerage is second nature," he says. Lauder believes brokerage companies need to apply the same imaginative and flexible approach to whichever area of the trade they deal with. "As far as brokers go, I don't really see any difference between major multiples and independents," he says. However, he agrees that the way the retail sector positions itself over the next few years will have implications for brokerage. "The c-store sector is a bit of a difficult animal in terms of who is going to service them. Cash and carry operators are going to find it extremely difficult, and it's the area showing least growth." As information technology plays a bigger and bigger part in the industry, Lauder believes the brokers who offer a comprehensive service will be best placed to reap the rewards. "The more we can offer, the more successful we are going to be," he says. "The agents that have a solid infrastructure in place will go from strength to strength, but anyone who doesn't see the importance of communication technology ­ for example, as a medium for advertising ­ is going to be left behind." {{Z SUPPLEMENTS: BROKERAGE }}