Northamber made a smaller loss during 2014 as it transitions from a traditional broadliner to ‘value-add narrowlining’ – working with fewer brands. The distie says it’s now more flexible and is signing new deals with the likes of Samsung. Dominic Sacco catches up with the firm’s director of strategy Alex Phillips (pictured left) to find out more…
It’s been a year and a half since you joined Northamber as director of strategy. How do you feel it’s gone since then?
It’s been really good. Northamber has a strong brand in the market – it’s been great doing a lot more events and working more closely with people like PCR than we have done historically. Doing PCR Boot Camp North last year and Boot Camp this year, it’s been good to go out and see customers, and talk to people we know from before about what we’re doing differently. We have a great team with some great partners.
What changes have you made and are continuing to make?
We’re more flexible and we like being flexible. By and large we have to be flexible to move with the times. There’s a lot of really positive things happening at Northamber and have happened in the last year and a half that we’re really proud to shout about. We’ve won several industry awards so it’s great to get some recognition. We’ve also had some pretty huge signings in terms of vendors like Samsung, which is great, but we’re still growing with partners like 3M, so it’s a good balance of working with our long-term partners and newer ones.
Last year you told us you wanted to turn things around at Northamber. It’s encouraging to see an overall 18.1 per cent sales increase to £35.7 million during the second half of 2014, as well as a pre-tax loss of £292,000 during the period – less than half of the £690,000 loss Northamber made during the same period last year. So there are signs of progress – are you on track?
I can’t comment on the most recent six months yet, but for the six months you mentioned, the reasons why we’ve seen strong growth is we’ve got a clear message in terms of what we’re offering to the market, we’re engaging more with partners, both channel and media partners like yourselves. We’re doing things like our own Tech Expo trade show and we’re doing that again this year. We’ve recruited more BDMs (business development managers) and field sales people. We’re building on our relationships to make sure we have a single vision and drive forwards.
How has your ‘narrow-line’ approach been received, which has seen you partner with fewer vendors than before, but across a variety of categories?
It’s been really strong. I think resellers like the fact they can call us and know we understand the products. If we’re listing the brand, then they can call us and have the same quality of discussion they would expect to have with the manufacturer – something other disties with a diluted focus can’t offer.
But because we still have the multiple categories, we can offer a joined up solution to resellers, and help them avoid multiple delivery and admin charges. It takes time for a reseller to deal with multiple distibutors because they’ve got to go across and set up credit lines, figure out payables and figure out where their goods are. With us they can come to us and have the in-depth knowledge of a specialist but the breadth and one place to go, with real-time order tracking.
What other changes are you making to the business compared to how it was two years ago?
It’s been around building on our strengths, so looking at the categories we’re strong in, and making sure we’re putting the right people and the right brands in them. So things like TFT monitors, we’ve been strong in that for the past couple of decades, but now we’re looking at what’s the right product.
So, yes there is the commodity low end product which still moves boxes in terms of volume, but if you look at it, the TFT market is growing because more people are paying for added features. We’re looking at how we can work with more brands to fill out the portfolio; in TFT we have a great range from Acer, Viewsonic and Samsung that allows us to offer a complete solution for all price points with all the features.
Are there any other new product categories you’re looking at?
We’ve seen a lot of success with AV products over the last couple of months. At PCR Boot Camp we were the only distie who were showing curved monitors, but also we’re the only IT distie with Yamaha. So we’re looking at how we can build other AV decisions around that. We’ve also signed with InFocus over the past 12 months, which is a leading projector brand. As we look to work very closely with schools, we’re constantly making sure our AV portfolio is in line with that.
Talking of schools, the back to school period is upon us, followed by Black Friday in November and then peak. How important are these sales periods to you?
I think there are certain traditional sales cycles, so things like public sector budget burn, which didn’t happen as much this year as it previously has, and has broken some of the cyclicality. But Black Friday is definitely a huge event now that we see across our retail partners.
In the education space, I think there’s still that seasonality to a degree, but it needs to be when the kids are out of school to go and do the installs. There will always be that element of seasonality for the bigger deals, but things that are easy to install can be more flexible.
Some reports suggest wearables are going to be big in the B2B space. What do you think?
We like to focus on the end user experience and really understand that. Buzzwords are great but what does it mean in terms of the end user? Why would they want to use it? I think wearables are great and have done well, but it comes down to what’s the end user experience. If we could find the product that has the right end user experience, add value and in B2B make their job easier to do or make their life easier, then by all means we’ll jump on that, but we don’t want to just jump on it without understanding where the market is.
Desktop and tablet sales are down, with the market turning to all-in-ones and laptops. What are your thoughts on the state of the hardware market?
There is a little uncertainty with Windows 10 coming out. With that and the refresh cycle, I think there probably is an impact. Saying that, there are still certain verticals that will always take a desktop and laptop, so it’s been a blend.
Some distributors have been frustrated about the lack of an opportunity to sell a Windows 10 licence, as it’s a free upgrade for many users. Have you?
Well, in the industry we always want to make sure everyone has a chance to capitalise on sales opportunities and help support the channel in doing it. But it is what it is.
Former Northamber director Henry Matthews recently criticised traditional tech distribution, saying that broadliners aren’t nimble enough in today’s market. What’s your reaction to this?
I think if you look at where we’ve gone with our narrow-line approach, we agree with that sentiment [that broadline distribution may not be as nimble]. I wouldn’t phrase it quite the way he did, but we agree that with the more value-add categories, you need people in place to focus on them. And that’s where we’ve seen so much recent success – having the right people focusing on where you can add value.
But I think the distribution market is evolving. If you look at a lot of the distributors, there’s a move towards value-add. I think we’re uniquely placed as we’re offering a breadth of reseller, but are able to have the right size so we can focus on growing.
What’s next for Northamber?
We’ve got some aggressive targets for next year and we’re pretty confident. We’re looking at other categories we can go in and we can use our strength in terms of customer base, logistics and availability of sales people. Things like AV and security are all areas we’re looking at and are excited about, whereas with traditional things there are always opportunities to add value.