8/12/2009 2:22:00 PM
No room for hot air in distribution
Consolidation in the distribution sector was widely believed to be inevitable, but it hasn’t happened. Yet the word inside and outside the sector continues to be that there are far too many distributors and not enough business.
The recessionary environment has exacerbated the structural faults in the distribution sector that many big networks and manufacturers simply ignored for years. Advantage and Dextra may have exited the market, but over the last few years Brightstar and Brightpoint have come in. With distributors facing up to the fact that there are ‘too many mouths to feed’, there was a belief that several businesses would collapse or be swallowed up by rivals. Instead, distributors have lost huge numbers of their workforce, reduced bonuses and accepted large salary cuts.
Although distributors are not a picture of austerity, there is a perceptible cultural change in the sector moving away from the wide-boy caricature. More fascinating has been how distributors have stopped throwing buzz words around, chiefly ‘convergence’ and ‘adding value’, compared with one year ago. Lofty talk of being ‘total communications providers’ seems out of kilter with the new accountability.
It seems a harsher environment now with no room for hot air and promises. Instead, the management of the likes of 20:20, Data Select, Brightstar, Avenir, HSC, Brightpoint and Fone Logistics are being put on the spot with questions on what they are selling today. Brightpoint underlined the challenging environment across all of its countries when it revealed a bleak performance last week.
It is the sector that has been squashed hardest over the last two years in terms of the size of the riches available. Distributors are still deeply valued by customers and suppliers alike, but the better companies should be relieved that both customers and suppliers are less charmed by the promises and more interested in today’s performance.