It has been a bloody awful year' was how the boss of a leading UK distributor reflected on the past 12 months at a recent meeting. Why? 'Because we've had to work so much harder than before just to stay in there.'
But surely all the other years were just as tough, if not tougher.
I guess the idea is that every year makes you realise how much easier it was the year before. Distributors are finding it tough and unfortunately it is not going to get any easier in 1998, if trade speculation is anything to go by.
The managing director of another, equally well-known distributor, told me recently that Q4 has been extremely difficult. One major broadliner is rumoured to have #50 million of stock. Intel's baffling Pentium II advertising campaign is confusing users and holding back remaining Pentium stocks. According to this source, only one of the major international broadline distributors is making any money in the UK at the moment.
Azlan' s problems have been well documented and we have seen Ilion revise its predictions to the City. Recent shake-ups within Ingram Micro and CHS Electronics are small. These are all considered definite signs that the strain is showing.
Sometimes, it seems that the politics can be as hard to manage as the sales. There is still too much expected of these companies, especially now they have shareholders. But the problem is that some of them do insist on digging themselves into rather large holes.
Growth predictions of 30 per cent attract investors. Combine that with a snazzy presentation, and lots of delicious market growth predictions will often be enough to give City analysts the confidence to place their orders. However, not everyone can accomplish, never mind sustain a growth rate of 20 or 30 per cent. The market is growing at an average of 12 per cent at the moment so it appears that something, somewhere has got to give.
My prediction for 1998 is that it will get even tougher for the distributors.
Vendors with ambitious growth expectations and a confident - but fickle - City will keep the pressure up on sales.
The rapid growth of electronic ordering will force distributors to invest heavily in their infrastructure. At the same time, they will be trying to get closer to resellers, invest in services and hold on to skilled staff. Not everyone, however, will be able to manage. If they do not leave first, we can expect the axe to fall on senior figures in the distribution sector. This means there may be repercussions within PC vendor companies as well. Many of them are not meeting the growth expectations of their head offices at the present time.
This year has been hard work, but it appears 1998 will be even harder. Some distributors won't see the end of it.
Simon Meredith is a freelance IT journalist.
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