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