Distributor Northamber says increasing competition in the tech distribution sector means more suppliers are lowering prices and 'eroding market value for everyone'.
Speaking to PCR at Northamber's Tech Expo event last week, director of strategy Alex Phillips said: "I think the market is very competitive now.
"Historically there’s always been two pretty clear-cut categorisations: the box shifter sector which is dominated on price, then you have more niche local players who are value-added distributors.
"I think where Northamber is heading towards is what I’ve been calling ‘value-add narrowlining’, where we work with three or four brands maximum in each category, which means we know our products in-depth and can provide a value-add service, but still have the convenience of a broadliner.
"I think there are some other disties looking at it another way. Where we’ve gone from broadline and simplified down to narrowline, I think some other disties who are historically niche are trying to grow, but they don’t know the areas they’re growing into, so they’re competing on price which means they’re eroding market value for everyone.
"They’re trying to make a name for themselves. They’re just doing things that erode value so I can’t really respect that as much."
Northamber made a £1 million loss in 2012/2013 but aims to turn things around this year (as revealed in a Northamber interview with PCR earlier this year). The company will release its results to the market in October.
"As a public company I can’t talk about results yet, but what I can say is we’ve been around for 34 years, we’ve always had a long-term investment view, so if you look at the past couple of years the choice that David [Phillips, Northamber chairman] and the board made was to walk away from certain areas that were loss-leaders, and wait and see where the market evolved to," added Alex Phillips.
"We’ve always been very good at responding to the market and also help lead it. And with the economy recovering, the timing was right for us to come out fighting again. So we have aimed to improve those metrics - we're encouraged with the short-term direction - but we’ve also maintained a long-term view.
"I’d say no other distributor has made the same kind of progress as we have in nine months in terms of developing existing partners and also adding new ones.
"Just look at some of the new names we’ve added and some of the new spaces. The uptake on that has been fantastic. I’m really, really proud of my team.
"I think also if you look at some of the new staff we’ve added, you’ll see the same thing. We’ve got some great people who have fitted in really well and are doing some really great things. I think we’re getting more depth with our existing customers and we’re getting a lot of them coming back to us or coming to say hi."