IMR Executive

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C2000 calls for action

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C2000 calls for action

Distributor makes sobering warning about the future

Computer 2000’s UK managing director Andy Gass has urged vendors to set realistic rebate and inventory targets, and to invest in distributors that are geared for growth but not saddled with debt.

He made the comments at this year’s C2000 Vendor Partner Summit and warned that the credit crunch could have far reaching ramifications for the industry.

“The theme of the moment is that it’s bloody damn tough out there,” said Gass. “The shock that we’ve seen in the financial markets says that almost anything could happen.”

The credit-based nature of distribution means that the lowered availability of credit can easily play havoc with the industry and shrinking margins warn of a need for consolidation.

“A 20 per cent drop in the market next year and the resulting 0.5 per cent fall in vendor margins could spell disaster as the whole of UK distribution would make no money,” said Gass. “Distribution is already challenged as profitability was already under pressure.

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“There will inevitably be consolidation through mergers, vendors choosing to work with fewer partners and some going out of business.”

Source: MicroScope

Very Sobering Thought

posted by Iain Shaw Nov 21, 2008 at 2:40 pm
1

I have to agree with Andy’s comment “The shock that we’ve seen in the financial markets says that almost anything could happen.” Who would have thought that great institution like HBOS could be brought to their knees so quickly? It makes one doubt all the certainties that we took for granted in our industry. I can only speak from an Indie channel perspective but if I was a distributor, vendor or service provider I would be looking for breadth at the movement rather than relying on the multiples and online retailers. The other thing I would be doing is thinking beyond traditional marketing methods and I would be looking to engage either directly, or through supportive distributors, with the established ‘for profit’ UK Indie communities such as Integra, NBG and Brigantia. I use the word ‘communities’ deliberately as this is quite unique and the difference between a member and a customer is quite profound. From a Brigantia perspective our forum of 1014 posting Indie members has been a lifeline to many who are leaning on their community for support in these troubled times. The bulk of Indies will survive because they are used to low margins on hardware sales and have been moving their businesses ever more toward service over the last three years. Frankly I do not see how the multiples can ever compete on service given the knowledge base and relationships required to deliver this.

Vendors could do far worse at the moment than making over stocks available to the Indie channel through the solid and well respected distributors working hard with our comminutes such as Westcoast, Midwich, Enta and others. Vendors might be surprised how easy it is to get their message straight to the Indie community through the established UK owned Indie communities at very reasonable cost.

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