Arrow points the way for distribution

As another US giant enters the market, what will happen to the incumbent players, Sara Driscoll asks

The move by Arrow to finally make its move into the UK mainstream distribution market with the now formally completed acquisition of InTechnology’s security and storage divisions was hardly a surprise.

The firm has successful operations in 53 countries and already operates in the UK through subsidiaries such as Microtronica. It was surely only a matter of time before the firm wanted a bigger slice of UK action – after all, the UK is the second-highest performing country for most of Arrow’s main US rivals.

What is more surprising, however, is that in an environment where most channel players are casting sideways glances at a distribution sector that has had a tumultuous time with low margins and commoditisation, Arrow has said it will plough investment into its new UK distribution subsidiary.

While InTechnology was in itself a successful distributor, the company noted in its financial statement as far back as 2004 that margin pressure had forced the firm to report financials below expectations. And having launched a managed services arm, it became obvious that the firm was more focused on the success of its new and exciting services division than its traditional distribution unit.

So while InTechnology had taken its distribution pot off the boil, rivals were fairly relaxed about the firm. However, with the marketing might of Arrow behind it, distributors in the UK and Europe will now be watching it very closely indeed.

Of course, investment isn’t everything. DNS will have its work cut out integrating the two InTechnology units, and re-invigorating the distribution staff following the takeover may prove to be a challenge. Not only that, but it is bound to take time to find its feet in the UK security and storage sectors, and while this is happening rivals may be able to steal a march. For now though, it is very much a case of watch this space.