Arrow ECS points to consolidation

Pearce: Arrow has the cash and desire to make selected and appropriate investments

IT distribution will mirror the financial and automotive sectors by eventually consolidating down to just four major players, according to Arrow ECS’ UK boss.

The distributor recently completed a pan-European integration process by uniting about 40 of its companies – including UK arm DNS Arrow – under the Arrow ECS banner.

UK managing director Steve Pearce claimed the re-organisation had nullified a major advantage of rival Avnet and allowed it to focus on improving its position with the top 12 vendors.

The UK organisation now has the backing to make “selected" acquisitions for the first time in 18 months, he added.

“The attitude a year ago was let’s conserve our cash and batten down the hatches,” said Pearce. “It has now been made clear to us at a senior management level that Arrow has the cash and desire to make selected and appropriate investments.”

Pearce argued that IT distribution was becoming a “big-business game” and that smaller independent distributors would increasingly struggle. Only four major players will survive long term, he asserted.

“It is settling down to a few enormous players who will either kill the smaller ones or absorb them, and we intend to be one of the ones that prevail,” he added.
Pearce said that Arrow ECS has a solid offering in both storage and virtualisation but indicated that the distributor’s third area of focus – security – needed work.

“Our security business has ebbed and flowed a bit largely to do with the quality of the team,” he explained. “Now we have the right people in place we see network security as a major area of enterprise computing value add and intend to expand our proposition in that area.”

Another major priority is to consolidate its position with the world's top ten vendors, including recent signing EMC.

"Portfolio expansion is a key area for us," Pearce said. "We have five regions in Europe and we are trying to fill the white space: where we are strong with a vendor in the UK, our colleagues in other regions are looking at that and vice versa. The top 10 or 12 vendors are consolidating at an incredible pace. We are starting to look at these things not just in terms of revenue but in terms of our strategic positioning – who are the people we have to have a relationship with?"

Of the rebranding, Pearce said: “We are now looking like one Arrow. That’s one advantage that Avnet had – they called themselves Avnet despite the fact they’re made up of a fairly messy collection of businesses behind the scenes. I am pleased to say we have forged into a very strong single unit in which we in the UK are a part. It wasn’t just a glossy brand change: a huge amount of energy has gone into rationalising systems and processes.”