For years, HART has been considered a parts distributor which follows its own path and is not afraid of new challenges. In April, the company joined the NEXUS purchasing group. Details of this cooperation were among the issues discussed with Piotr Siłka, HART owner.
“There are things I value more than sales results”
Witold Hańczka (Motofocus): At the beginning of April, HART joined the NEXUS purchasing group. What do you expect from this cooperation? Who made the first step – you or them?
Piotr Siłka (President of Hart): It is hard to say who made the first step. Actually, neither party exerted pressure on the other. This was quite natural and resulted from the talks we held on various occasions. To be honest, it took us quite much time to decide to join the purchasing group. Other major distributors were faster. This was mainly due to our approach to business. I believe that a purchasing group makes sense only if one distributor from a given region joins it. If the group brings together competing companies, you never know how it is going to work. Nevertheless, the terms of cooperation established with NEXUS seem correct and consistent with our expectations.
Quality has always been our first priority. And this is in line with our official tagline “Quality and precision”. We make every effort to maintain and improve the quality. Our activities in this respect are appreciated among suppliers, customers and market competitors. Quality is also something we hope to further improve in our cooperation with NEXUS. To achieve this, we want to expand our offer and provide our customers with better support using available measures.
On the 1st of April, you introduced a new return policy. The problem of returns has been discussed in the industry for a long time, but no major distributor has dared to take such a step so far.
For me, this is a storm in a teacup, or actually an extremely small teacup. I urge you and all people in the industry to think logically. There are customers who claim that they do not incur costs for returns in the case of other competitors. Is that really the case? We all know that the costs of return need to be recognised. The question is what is better. Is it better to charge all customers by including the costs in the margin or to act like we do? Our approach is to calculate the cost of a single return. This cost is incurred by us in part, e.g. two PLN out of five, while the remaining part is imposed on those who actually make returns.
Some customers say that the new terms may be quite restrictive.
Our goal is to divide the term “return” into three categories. The first category covers all “rentals”. All customers who rent parts fall into this category in the first place. The second category includes returns due to our own fault. In this case, the costs are still borne by us. The third category covers all in-between or questionable situations. In this case, we also incur the costs. We also intend to invoice at least two returns made in a given month. With respect to large customers who find the new regulations inconvenient, we will try to compensate for these inconveniences. We believe that our customers appreciate the quality we provide and would like us to maintain or improve it. But to ensure quality, we need to change the return procedure. Otherwise, we will end up “in the red” and be forced to lower the standards we offer today.
Are the changes in the return policy based on the estimates? You are not afraid of losing customers? Do you expect more companies to follow your example?
You do know, and everyone in the industry does, what it is all about when it comes to returns. Every company should come to the conclusion that changes aimed at reducing this problem are absolutely necessary. We must start to trade following western standards, guided by economics rather than unhealthy competition. We decided to do this and I am sure that others will do the same. They know that in business, they have to keep an eye on their margin. I remember the time of political transformation and the way the market was shaped at that time. At the beginning, people followed the 3P principle, that is “price, price and once again price”. Over time, other criteria started to count: quality, punctuality, abidance of contracts, rate of order completion, standards of the transport company that handles deliveries, etc. All these factors should influence the customer’s decision to choose HART. We realise that nowadays, there are few customers who use only one wholesale outlet. Most often, people prefer to have 2 or 3 outlets. We do not want to change this in any way by force. However, we hope that customers will stay with us. Our assets count more than the amount of 3 PLN for unjustified return. Actually, this amount is insignificant as compared to the refund equivalent to the part of the value and amounting to 100–200 PLN or more. Note that our goal is to eliminate the “parts rental business” rather than the return service itself.
Consolidation on the European distribution markets is currently one of the main issues raised in the industry. Is HART ready to consider a potential offer from one of the world’s giants from Europe or America?
The issue of market consolidation is obviously familiar to me. I contacted many reputable large companies. However, as the entrepreneur, I primarily wanted to satisfy my curiosity and interest. Frankly speaking, I am quite critical on this matter. In principle, globalisation is good and beneficial. If you decide to cooperate with another company to receive benefits and give something in return, it is absolutely OK. This is a step in the right direction. However, if one of the companies becomes a commodity to be bought by other, larger companies, I say: “This is unacceptable”. My vision of business puts aside sales and financial results. What I value more is job satisfaction and steady progress. I never want to see my company become a commodity at the mercy of a large corporation which can sell or buy it back whenever it wants to.
Most distributors on the Polish market have been growing in recent years. However, more and more often, it is said that profitability has to be improved. Does HART also see such a need? Are the financial results for 2018 satisfactory?
As I mentioned, sales results are less significant for us. However, as a commercial company, we are obliged to deal with financial matters and identify risks. To be honest – though our company ensures financial transparency either way – our results for 2018 are not satisfactory, especially when compared to previous years. For this reason, we intend to take appropriate steps to improve the results. We will certainly not try to achieve this goal by increasing the sales by any means necessary. We will also not compete with other distributors. Instead, we will improve our margins in a balanced way and try to compensate our customers for any possible inconveniences, e.g. with respect to the returns already mentioned here. We will try to make sure that our customers keep balance, as they say, so that they will not record a loss and possibly benefit in the end. As I said before, we do not focus exclusively on prices. We want to ensure the quality at every stage of cooperation with our customers. I would like our company to be perceived they way a grocer’s is as compared to a hypermarket. The grocer’s delivers better customer service and serves more exquisite products. However, we also need to bear in mind that it may be a bit more expensive.
What are the company’s plans for the next months/years? How about some new investments or fairs organisation?
Certain investments are obviously planned, but not many. This year we will open another branch. We also plan to enlarge several auxiliary hubs. We do not stop. Our objective is to continue our steady growth, though in a gradual and sensible way. We do not intend to compete with anyone and cause the curse of abundance. People capability and warehouses capacity are limited. As the entrepreneur, I believe that 10–15% growth is acceptable. 30–40% growth is too much as it may cause the loss of control over the company and affect the way it operates.
As far as trade fairs are concerned, we do not plan to organise them for now. We will certainly proceed with our local meetings with our customers (Hart Moto). We do not exclude the possibility of the fair being organised and recognise the importance of such events. However, there are currently other priority projects underway.
Does the company intend to celebrate its 30th anniversary in a special way next year?
To be honest, I am not a partygoer or media enthusiast. I have never paid much attention to anniversaries or other celebrations. We will certainly prepare something to celebrate our anniversary. However, we do not intend to make a big noise. For me, these 30 years are not only the reason for joy. I would also like to reflect upon how quickly this time has passed.
In addition to its business operations based on automotive parts trading, HART promotes sport by organising tennis tournaments in its own sports facility. Why tennis?
It is no secret that I have a great passion for sports. Not only for tennis, but also for other disciplines: badminton, squash, gym, skiing. These are my passions from an early age, actually from childhood. For 18 years, we have been organising the International Tennis Tournament Hart Open in Opole. It is noteworthy that, as we found, at a certain time, the TOP 10 of the women tennis player world ranking featured 5 girls who had participated in our tournament before. This shows how prestigious and popular this tournament is. As I mentioned before, besides tennis, I like skiing. It is worth mentioning that we were sponsors of Maciej Bydliński, ski racer, at his Olympic performance. Our company promotes sport. We encourage our employees to be active. Obviously, we cannot force things.
We know that tennis and skiing are in no way associated with the automotive industry. However, there are distributors who sponsor motorsport events or teams. Maybe we will follow this way.
source: www.motofocus.pl
