Institutional Channels in the Netherlands

Economic recovery helps institutional channels

After a period of economic decline, the Dutch economy is now in recovery, which had a positive influence on private institutional channels in particular. Although the economic downturn affected private and public institutional channels and limited their development, the economy has turned a corner and is showing signs of improvement. While this had a positive impact on the development of private institutional channels, for public institutional channels the economic recovery brought some relief although the effect is more limited as in most cases these channels are subject to long-term programmes of budget cuts.

Purchasing groups more common for institutional channels

It is more common within institutional channels for end-users to form purchasing groups. Small and mid-sized end-users in particular are likely to join a purchasing group as they see this as an effective way to reduce overhead costs for their organisation. Purchasing groups are often able to negotiate better contracts and can purchase business-to-business products. Besides purchasing groups other methods for the purchase of these types of products have also become popular. For instance, larger end-users use the services of brokers and consultants to achieve lower prices.

Institutional service providers offer more services

As profit margins continue to come under pressure and as the role of service providers changes due to the trend towards more flexible and mobile work spaces, service providers adapt by offering a wider range of services. This means that the boundaries between various service providers, such as food service providers, facility management companies and contract cleaning companies, are becoming blurred. All these service providers are moving towards a business model where they can provide a full package of services to their customers.

Institutional distribution model begins to resemble retail distribution model

Because of the trend towards decentralisation of public institutions and the need for private institutions to receive products and services which cater to their specific needs, the distribution model for institutions is changing. Instead of delivering products to one central location, distributors and wholesalers often use technology to deliver products more locally to where the products are really needed. Because of this shift towards a less central distribution model, the major distributors are positioning themselves more as retailers. Major retailers, on the other hand, are more active in business-to-business categories by offering delivery of groceries and other products to business-to-business customers.

Public institutional channels will become even more fragmented and decentralised

The outlook for private institutional channels is positive as most categories will profit from the further recovery of the Dutch economy. Public institutional channels are likely to witness more turmoil. For these channels there will be a further shift towards a more fragmented and decentralised landscape. The Dutch government sees decentralisation as an important tool to enable it to get to grips with government spending. Public institutions will have to rely more on funding from the local rather than the federal government. The objective is to move away from inefficient large organisations and to create more small and local institutions instead.

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