How was 2017 for Exertis?
Exciting and full of opportunities. Indeed, Exertis achieved almost 20 per cent growth in revenue for the first half of our financial year (£1.371bn) ending 31st March 2018, compared to the previous year with very strong operating profit growth of 25.8 per cent, in the seasonally less significant first half of the year.
Our UK and Ireland business performed very strongly and benefited from good growth in key product areas, such as smart home, enterprise and components, and from recent acquisitions. Hammer, acquired in October 2016, has performed well and has significantly strengthened Exertis’ presence in the server, storage and related services markets. The UK business has also enhanced its position in the audio-visual market through the acquisition of Medium, completed in December 2016, and the organic development of its vendor and product portfolio, particularly in edTech. In Ireland we achieved strong growth, driven by gotiod business development in the mobile and retail sectors and growth in sales of networking and security products.
Of course, we continue to have a strong presence in retail, brought about by years of experience in providing the right products and services for different types of customers along with our expert teams of knowledgeable people specific to this area.
In April, we created a dedicated Consumer Business Unit (CBU) to drive growth in this key area of our UK business that contributes significant revenue and profit for the company. Operating across our Basingstoke and Harlow offices, the CBU has over 250 employees with fully aligned sales, purchasing, commercial and marketing functions. It combines several successful areas of the business: gaming, where Exertis is the number one UK distributor; Smart Tech, where we are a clear leader in this new but increasingly important market; gadgets, accessories and premium audio from our specialist Exertis Unlimited division and a wide range of market leading brands in consumer IT and accessories.
Our dropship programme has been a key enabler for our retail customers and we have been successful in adding a technology portfolio to retailers that weren’t previously in that sector. A good example would be with our Smart Tech offering. It’s a market in which we entered at a very early stage recognising its potential and that has enabled us to lead the field, opening up new opportunities for our vendors in the DIY and wholesale trade markets. In addition, we have always had a strong presence in the games market where we have taken advantage of exclusive distribution agreements with key vendors and built a portfolio that encompasses PC hardware, consoles, accessories and software. Our new demo suite in Harlow has also been a great success in showcasing a range of CE products.
We continue to expand our service offering to customers and vendors and the acquisition of MTR Group, completed in July 2017, has significantly expanded the UK business’ mobile device refurbishment and managed services capability and the business has performed well since.
Looking back, I would say that 2017 has been a significant milestone for Exertis where we have profitably grown our business, consolidated our acquisitions and retained key specialisms within a diverse technology business. What’s more, we still have opportunities to make our business even stronger in the future.
Talk us through the different elements that makes up Exertis’ business
Exertis is unique in that we provide a portfolio that extends from consumer through to enterprise. Whether it’s IT, mobile, home entertainment or simply supplies, we have the broadest product portfolio in technology distribution from the world’s leading vendors. Indeed, Exertis is truly your archetypal one-stop sales, marketing and distribution service provider, supplying product solutions, logistics and a range of services to over 11,000 customers in the retail, business, mobile and supplies markets. However, it’s our specialism and expertise across these diverse technology areas that makes us unique in the industry and positions us as the distributor of choice for our vendors and customers.
Each technology area requires its own degree of specialism. It’s not a one size fits all type of business. Far from it, customers rightly expect products and services that are applicable to their business. They have specific requirements and we are particularly mindful to ensure that we have retained the specialist skills in businesses that we have acquired in addition to ensuring that all our employees receive the necessary training to keep abreast of technology.
We have dedicated business units covering consumer, IT, enterprise, mobile and a separate supplies business. Within IT, we have teams focused on computing, Pro AV, print and components. In consumer, we have dedicated resource in gaming, accessories and pro audio. In enterprise, we have experts in server and storage, UC and security. Our customers are equally diverse, ranging from retailers and etailers to mobile dealers, system integrators and VARs that service the retail, SME, enterprise and public-sector markets.
With such a strong technology offering, we are not dependent on any one area. In addition, we have the backing of a leading international sales, marketing and support services group that is highly successful, ambitious and entrepreneurial. DCC, our parent company, has supported Exertis both in acquisitions and transformational projects.
How big a role does gaming play at Exertis?
Gaming is an important part of our consumer offering. We grew our revenues by almost 50 per cent year on year with a product portfolio that encompasses PC and console hardware, software and accessories. We have added key brands to our portfolio, maintained exclusive distribution with many vendors and taken advantage of market opportunities derived from VR, AR and eSports. Our team in Harlow that has established new relationships, maintaining our position as the number one gaming distributor.
We also offer a state of the art digital distribution service both online and in-store through Exertis Ztorm, working with all leading games publishers and software vendors to distribute their titles to retailers. It offers thousands of ready to sell SKUs, delivered via a simple API-integration that ensures a high level of security and control, while minimising the workload of our partners.
With more and more distributors going down the services route, how important is this to Exertis?
Growing our services portfolio is a key strategic focus for the business. However, Exertis has always provided a number of services specific to retail including category management, merchandising, POS, product packaging, product demonstrations and training, reporting market and trend analysis, and drop shipment and fulfilment. These are certainly integral to our retail offering.
In addition, we provide an ISO 27001, professional services portfolio which is designed to equip resellers with the skills, knowledge and confidence to service and support their own customers. These services can be white labelled and include straightforward ‘break-fix’ through to a 24/7/365 complete managed service. We also offer a pro-active, vendor agnostic monitor and incident response service. Exertis delivers this portfolio with fully qualified engineers and support staff, and from our own Technical Assistance Centre (TAC). Most recently, we gained Cyber Essentials PLUS certification for our professional services division, an independently verified self-assessment which assesses a company against five basic security controls. This provides independent assurance that you have the proper protections in place to help prevent the vast majority of cyber attacks. That provides our resellers with confidence to use our range of white label support services for their customers. At the same time, we completed IASME governance which demonstrates that a company has prepared for the introduction of GDPR by focusing on how data is collected, maintained and protected.
Furthermore, we are also taking advantage of the expertise and services provided by MTR with their high-tech refurbishment facility. We see the ‘as a service’ model expanding into hardware and it’s an area in which we will provide a range of solutions.
2017 saw the first Plug-In To Exertis event at Twickenham. How successful was this and are you looking at running future events?
I think if you manage to get 950 attendees and 107 vendors exhibiting for the first time that you run an event on this scale, you can call it a success. Plug In To Exertis was devised to enable customers to gain a better understanding of the range and diversity of products we provide. Customers had the chance to focus on their area of business or look at other opportunities. Certainly, we have seen resellers buying products from us in areas that they hadn’t previously. That was a key goal; to educate our customers on the technology range we can provide and make it as easy as possible for our customers to buy products and solutions from Exertis.
Certainly, we were pleased with the attendance and the interest in the seminars that we ran as part of the programme. The feedback was excellent. As far as repeating the exercise, you will have to wait and see!
As an established distributor in the Channel, what are the differences in the market today compared with when Exertis started up?
Technology continues to evolve and distribution has had to adapt to changing market dynamics. While the basic components of the Channel remain the same: vendor, distie, retailer/reseller to end customer the original pick, pack and ship model has certainly moved on. Of course, the core competencies of distribution: sales and marketing, credit and logistics remain but services have become a key differentiator for distributors. Generally, there has been a move towards more services in all customer segments along with a more customer centric rather than vendor led approach to business.
In addition, consolidation has been – and remains – part of the landscape. Distributors have become either larger and more diverse, taking advantage of economies of scale, or specialised in more niche markets. The same applies to vendors and resellers. Despite the effect of e-commerce, the Cloud and other dynamics, distribution remains as relevant as ever. Consultancy firm RootSquared predicted in a new GTDC report that distribution will build and extend its market relevance. In the report, it noted that 70 per cent of channel interviewees expected to see an increase in the share of business going through two-tiered distribution.
Certainly, we have witnessed some major changes in retail. The internet has transformed the way consumers both make and transact their purchasing decisions. The omni-channel approach in retail has led to a requirement for 24/7 support services and distributors have had to respond accordingly. While change is constant, distributors need to retain their relevance to customers and that will always be the case.
Talk us through your Channel acquisitions over the past 18 months
Back in July 2016, we announced that Computers Unlimited (CU) had legally transitioned to become a division of Exertis UK and was rebranded as Exertis Unlimited. This acquisition brought added expertise in the CE market and access to products and accessories for Apple, a range of premium audio products and products for creative professionals. We have since added Smart Tech products into this division and it continues to be a home for emerging technologies and innovative brands.
We acquired Siracom a wireless and mobility distributor with particular pedigree in the education market and added this expertise to our growing enterprise portfolio. This was soon followed by the acquisition of Hammer in October enhancing our capability in the mid- and higher range server and storage market. Hammer continues to operate as a stand-alone business with a well-earned reputation as a storage specialist. We collaborate on opportunities, as evidenced by our appointment as a Dell EMC distributor, and provide value-added services and bespoke solutions in a number of vertical markets.
A month later, we acquired Medium Ltd, a specialist audio-visual distributor of projectors, flat panel displays, interactive systems and digital signage with leading brands that include CTOUCH, Casio, Hitachi, LG, NEC, Panasonic, Samsung and Peerless. Medium had an unrivalled reputation for customer service, industry knowledge and offering specialist support and solutions in key areas of the AV market. Medium’s technical expertise strengthened our ability to implement a full suite of professional AV solutions into the B2B market where our complementary products and services provide opportunities for additional growth in a market where IT and AV is continuing to converge. Since the acquisition, the company has been rebranded to Exertis Medium and moved to new premises. We have also added vendors to our portfolio, significantly Promethean.
In 2017, we acquired MTR Group, a service and solutions provider specialising in second generation lifecycle extension of mobile, wearable and tablet devices. This is hugely complementary to our mobile and computing divisions. With more than 15 years’ experience within the service and repair network, their team of highly trained technicians offer a complete repair and refurbishment process including data cleansing and when required an environmentally friendly disposal service. MTR has a strong relationship with Samsung, a key vendor for Exertis, who appointed them as their exclusive UK Trade-In partner and an approved repair centre to support 17 Samsung Service Centres located in Samsung stores around the country. In addition, MTR also supports Samsung with their annual ‘Upgrade Program’ ensuring that their customers always have access to the latest flagship products.
Exertis is collaborating with MTR on a ‘Device as-a-Service’ programme that will provide our B2B resellers with a more sophisticated suite of services that they can provide white labelled to their end user customers that have a fleet of mobile devices, enabling them to take advantage of a quick turnaround to repair a broken phone or to manage a buy-back or multi-user trade in scheme.
With all our acquisitions, the intention is to retain the expertise that has made the company successful in the past and develop opportunities for the future. Of course, these acquisitions that I have mentioned only relate to our UK business.
Are there any more acquisitions on the cards for the coming year?
We are always on the lookout for opportunities that can enhance our skills or expertise either within, or complementary to, the technology areas in which we operate or where we see the chance to increase our European footprint.
Is Exertis investing in AI? If so, what will it bring to Exertis and distribution as a whole?
New technologies always provide opportunities for the channel. We always want to be the distributor who is one step ahead and at the forefront of technology innovation. And if the right opportunity presents itself in AI… why not?