It’s been one year since Brent McCarty took the reins at Ingram Micro UK, and while it’s bucking the trend in desktops and notebooks, he’s also determined to change some of the perceptions surrounding the distributor.
The VP and MD tells Dominic Sacco about loosening the purse strings, being more nimble and why Ingram Micro is not a sleeping giant…
You’re currently in the process of moving offices – why?
We’re a $44 billion company but if you came into our office you wouldn’t know it. It’s a good example of the cost-cutting nature that we’ve had. It’s like we’ve got so conservative, and when you’re working in an environment where you’re not making any investments, you’re flat or slightly growing, and when employees leave you have the opportunity to say, “Okay, let’s save some money”, it’s not exciting. We’re going the other way now.
We’re really going to improve the office to make it much more representative. The building we’re trying to get is in downtown Milton Keynes. It’s in the hub and by the train station and hotels, and we’ll have a place that’s going to be dedicated to customers and vendors for meetings. It supports the culture we’re trying to build.
What type of culture? How is Ingram Micro different to how some resellers perceive it to be?
A couple of customers have said: “You guys are big and you’re kind of in an ivory tower.” And this wasn’t the general feeling, but one person called us a sleeping giant. My feelings were hurt, I have to say. But as I’ve really got to learn about our associates, nothing could be further from how we actually are. We have a team committed to winning in the marketplace, it’s a fun place to work, people are super engaged and are absolutely passionate about the customers and the vendors.
We want to bridge the gap so people understand what a great company we are. Our results are fantastic right now – both in the UK and company-wide. We’re poised for a lot of success over the next few years. We’re not a sleeping giant and we really do have great people.
My favourite quote I got from our president is: “It’s not the big that eat the small – it’s the fast that eat the slow.” I totally agree with that. Some feedback I’ve had is that what we’ve accomplished in the past year has been more than we’ve accomplished in the last seven or eight; we’re moving at the speed of light.
We’re diversifying. We have four pillars: our traditional distribution business, Ingram Micro Mobility, Ingram Micro Logistics and the cloud.
Ingram Micro Mobility was formerly [wireless device distributor] Brightpoint. We made the acquisition in 2012, they’ve now been 100 per cent integrated into Ingram Micro UK and are almost fully integrated globally. That’s been a fantastic acquisition for us.
“Some say: ‘You guys are a broadliner, all you’re going to do is reduce the margin that’s available in the channel.’ We want to change that perception of us.”
Ingram Micro Logistics takes our world-class logistics capabilities and packages those as a service to our customers and vendors.
We operate on razor-thin margins, so we’re experts at logistics. Many of our retailers are great at shipping products from warehouse to store, they can build their own monstrous warehouses to support the Q4 push but in Q1 and Q2 there’s less utilisation. With an Ingram Micro service model, they really only pay for the space they use – it’s flexible.
The fourth pillar is the cloud. We’ve had a lot of success here and it’s evolving further. We want to invest resources driving that each and every day.
We hope people can understand what a great company we have – we’re doing so well as a business and are being rewarded for our efforts in the results. But there seems to be still a bit of a disconnect as to what some of the perceptions are about Ingram Micro versus what we’re actually achieving.
What kind of perceptions?
There’s a bit of a misperception that we’re just this great big huge broadline distributor. That frustrates me. We do have a volume business but we also have a lot of investments in very specifically focused areas to take advantage of what we can do on the volume side – and to specialise in the technologies. Some conversations start with: “You guys are a broadliner, all you’re going to do is reduce the margin that’s available in the channel.”
We want to change that perception of us. The reality is we want to be in the margin business. We already have a big-volume low-margin business. We want to invest in areas and try to protect the margin portfolio within that category. We’re much more than a broadliner. We’ve made tons of investments and we’re growing like crazy with those vendors supporting us on the enterprise side.
It seems a risky move as times are still tough…
In distribution you always have to be conscious of cost because the razor-thin margins don’t allow you the better things in life. Over the last five, six, seven years we’ve stripped the muscle right off the bone and taken a very conservative approach. We’ve had this mentality that we don’t want to spend. But now we’re investing.
“What we’ve accomplished in the past year has been more than we’ve accomplished in the last seven or eight; we’re moving at the speed of light.”
We had 30 vendors coming over to the office recently, and I thought: “Why not take them to the Mercure hotel? Let’s buy them a round of beers, stand up and tell them our strategy.” The response I got from the team was: “Well that’s going to cost £250 to do that.”
As soon as I heard that, I thought the lack of investment is so conservative. I tried to explain that for £250 it’s a no-brainer, because otherwise how long is it going to take me to drive around to 30 different vendors and tell them the same story one-on-one? We got the 30 people in a room, they got the message, and right afterwards I got a ton of emails from vendors saying: “This is great, this is the most outwardly spoken thing I’ve heard from Ingram Micro.”
You mention strong sales – how have you performed in the UK over the past year?
Very well. We had high single-digit growth for the year and overachieved what we anticipated at the start of the year. The timing was right to start to layer in the additional resources because as Gerhard Schulz took over, he went out and evaluated all the countries and saw the UK was performing pretty well. It’s ultra-competitive, but it’s a big market so we definitely have room for some growth here – and that’s why we’re making the investments we’re making.
Where did you see the growth in 2013?
We saw some fantastic growth through the back half of the year on enterprise networking, which has carried over into the front half of this year.
We also made some investments a couple of years ago in pro AV and digital signage, and that is just exploding right now. We’ve hired a dedicated team.
Believe it or not, we had an outstanding year in desktop PCs and notebooks; we really bucked the trend.
We picked up some market share in different areas, invested in it, made sure we had the right inventory in place and beefed up sales organisation so we could be talking to the right customers, and we had a really good run there.
Desktops seem to be performing well with resellers and retailers too…
What’s changed in the home is that consumers have shifted to tablets for day-to-day use, but families still have a PC unit in the household, which is there to stay.
What are your other goals for 2014?
Number one, we’re making all these investments now so we’ve got the business structured in a way that will help us go to market and continue the growth we’ve been achieving in the customer segments as well as with vendors – really getting the return on the investment that we’re making. We have a target for double-digit growth this year.
We also want to drive additional breadth into our enterprise line. That’s what keeps me up at night: how do we demonstrate to vendors that we’ve got a unique business model? That’s the area I’d like to focus on.
FACTFILE: Ingram Micro UK
Based: Milton Keynes
Contact: 0871 973 3000
Warehouse size: 280,000 sq ft