Three retail-focused VARs on how the pandemic has impacted their business
Bosses at Wanstor, Tryzens and Recarta open up on how they’ve fared during lockdown and the opportunity facing them as more consumer spending moves online
Name: Francesca Lukes, commercial director, Wanstor
Revenue: £14.9m
VAR 350 ranking: 257
How important are the retail and hospitality sectors to Wanstor's business?
Retail and hospitality are core parts of our business, accounting for about 40 per cent of what we do. We include amongst our clients high street and online retailers, as well as hospitality businesses which are quick-service dining and fine dining too.
How tough has the last few months been for MSPs and other tech suppliers serving verticals as badly hit by lockdown as retail and hospitality?
There's no doubt this has been a challenging time for business, especially those working closely with the sectors hardest hit by the pandemic. MSPs and tech suppliers to retail & hospitality sectors have had to respond with agility to the changing requirements and demands placed on them as a result of shifting priorities and government recommendations. It's also been a refreshing opportunity for businesses to re-evaluate their priorities and strategies, in many cases accelerating the digital agenda to drive enhancements to efficiency, productivity and the customer experience.
Our team has really stepped up to the plate and it's been an opportunity for Wanstor to demonstrate our capabilities, agility, and strengthen our customer relationships. We've enabled clients to transition to remote working in a matter of days, mothballed sites, delivered strategic transformational projects, launched new site concepts, and now have scaled the operations back up again. We've demonstrated our commitment to our customers in these sectors with a flexible commercial model that has ensured that their services have been right sized to what they need.
To what extent have you had to make use of the government's furlough scheme?
The furlough scheme has been very helpful in helping us to respond proportionately to demand. At its peak we had c.20 per cent of our workforce furloughed. We took a very measured approach that was in line with customer requirements - reviewing demand day by day and week by week at the beginning. Most of our team have now returned to work and we're hoping to have our full team in play by August.
Recent research found that over 85,000 UK businesses have launched online over the last four months. Has that shift to ecommerce happened among your retail and hospitality customers, and - if so - what kind of help have they needed from you?
The shift to online has certainly been accelerated by the outbreak, but many of our clients have been establishing their digital presence over the last few years. This meant we had expertise in supporting and getting solutions up quickly. Specific projects we have supported with include integration of the likes of Uber Eats / Deliveroo with our customers' POS systems; assisting in the build, site set-up, product mapping and end-to-end testing.
For our retail clients the growth of online sales places a strain on the supply chain and their focus has been on maximising the efficiency of their operations with the rollout and development of their ERP systems.
Shops opened on 15 June, and pubs and restaurants in July. What kind of opportunities has that generated for Wanstor?
Our team has collaborated closely with our hospitality and retail customers on their reopening plans to restore and thoroughly test all on-site technology in order to maximise the success once trading resumed. Most of our clients also took the ‘downtime' to deliver strategic projects such as the rollout of ERP solutions to optimise supply chain efficiency, delivery integrations, point-of-sale upgrades, and the development of new site concepts leveraging Kiosks to minimise face-to-face interaction.
As restaurants and retailers accelerate the use of digital instore, be that through pay-at-table apps, kiosks, or delivery integrations, the connectivity on site become increasingly important. Performance dips or lack of availability have an immediate impact on turnover at a time when sites cannot afford to lose trade. The development of high-speed low cost FTTC and FTTP services have helped retail and hospitality customers deliver their own services, as well as instore customer WiFi. We've seen success with our SD-WAN solution that maximises the availability of any trade-critical applications by prioritising that traffic.
How have you adapted your proposition since 23 March, and has COVID-19 forced you to evaluate the technology and services you offer for the longer-term?
There have been a few positives from Covid-19, one of them being the opportunity and imperative to reflect on our services and longer-term strategy. Our team has been working hard over this time to develop new services, improve the delivery and customer experience for our existing customers, and evolve our commercial offerings to provide flexibility for customers in the new normal.
Cyber security has become an increasingly prevalent concern. Phishing attacks alone have risen 667 per cent since the start of lockdown, as cybercriminals are taking advantage of the disruption and anxiety that the outbreak has caused. Wanstor have developed a series of services to address these issues amongst our clients and support them to lay a solid security foundation. These include security scanning and vulnerability management, consultancy towards accreditations and compliance frameworks such as Cyber Essentials and ISO27001, and adaptations of our proactive IT support services to emphasise the importance of key security controls.
In a period of significant disruption and change across all of our customers, not just retail & hospitality clients, we have invested in developing a flexible commercial structure that is based on a per-site or per-user model, so that retailers and restaurants are able to flex their services and cost month-to-month in line with their business. This has proven very popular so far, as has the introduction of our hardware-as-a-service offering to enable organisations to invest off their OPEX instead of eating into their tight budgets.
Overall, have sales been lower or higher than normal in recent months?
We've seen increase in demand for some of our services such as hosting, and from our customers in verticals which have been less badly impacted, however net sales have been down. We supported our worst hit customers with ‘contract holidays' proportionate to their drop in demand for our services which in some cases was 85-95 per cent. The cost to the business has been mitigated greatly by the government furlough scheme and we are now bringing back many of our staff.
Whilst net sales dipped, we have had several success and new business wins. As a business we are not entirely focused on hospitality, and this has been a help. Amongst our retail and hospitality customers, the diversity of types and geographies of business has also been a mitigating factor for us.
We had a very strong start to the year so on the round we're still targeting growth on last year, albeit not to the extent that we had hoped for.
What will be the blueprint for success for tech suppliers in the retail space in the 2020s?
The retail and hospitality sectors were already shrewd operators, but disruption on the scale of the global pandemic we are experiencing makes it even more important to maximise the value of every investment. There needs to be a laser focus on the results that technology investments will drive; maximising trade through network performance and availability, quicker speed to service using point-of-sale and kitchen display systems, or cost optimisation through supply chain visibility. Businesses in this sector will work with tech suppliers who can demonstrate strong understanding of the realities of working in the industry, experience integrating the ecosystem of technologies and software's vital to it, and the agility to respond and implement solutions quickly. Our expertise in both the operations and technology that drives retail & Hhospitality businesses is what stands us out in the crowded MSP space and why some of the best restaurants and retailers in the country continue to choose us as their technology partner.
See next page for Tryzens CEO Andy Burton's views
Three retail-focused VARs on how the pandemic has impacted their business
Bosses at Wanstor, Tryzens and Recarta open up on how they’ve fared during lockdown and the opportunity facing them as more consumer spending moves online
Name: Andy Burton, CEO, Tryzens
Revenue: £12m
VAR 350 ranking: 260
You describe yourself as a digital commerce consultancy. How has business been for the past four months?
It has been a roller-coaster ride; our clients have been at the sharp end of the hyper-growth of online demand as all other channels closed down. For our clients, managing the situation of temporary store closures has been tough and has come with the financial burden that has been placed on so many businesses and individuals throughout this time. Some brands have shot to great heights with products that were in demand throughout lockdown. While others, laden with large store estates, have had to make some tough choices, with a few experiencing formal public restructures.
However, one thing is certain, ecommerce is no longer just a desirable ‘additional channel' for going to market. Instead, it is a core pillar of a modern retail business continuity plan, and retailers and brands without a credible online capability are at a considerable disadvantage going forward. These retailers and brands lack the ability to adapt quickly to changing circumstances and to reach new consumers in different markets.
Given your focus on ecommerce, have you been shielded from the store closures, furloughs and bankruptcies seen in the wider retail sector, or has there been a knock-on impact on your trading?
It has been mixed. 90 per cent of our clients have a physical store footprint which typically supported the majority of their sales pre Covid-19. Our clients faced the same challenges everyone has faced in this pandemic with forced temporary store closures that dramatically threatened their cashflows. All of our clients have witnessed significant upswings in online demand that has continued to this day even though store re-openings are now largely allowed.
The impact of the pandemic can be split into three distinct phases. The first phase is the initial ‘crisis' which hit in mid-March. During this phase, pretty much every business took stock to understand the financial outlook in an unforecastable situation. Then came the second phase - the ‘coping strategy' which was deployed by April. During this period, demand had moved online in huge numbers and ecommerce operations required optimal performance 24/7. The third and most recent phase has seen retailers determine their new plans based around investment in digital commerce and managing their store estates to determine the right mix going forward.
We have certainly not been shielded from the impact of the severe fluctuations in client revenues, business model changes, and cashflows. Our number one aim throughout this time was to support our clients as much as possible to weather the most unpredictable of storms.
Recent research found that over 85,000 UK businesses have launched online over the last four months. Does that mirror what you are seeing? To serve a local market demand vs setting up a complex multi region
Not in those numbers! But yes, smaller retail businesses and brands/product manufacturers that are looking to go direct to consumer (D2C) are definitely seeing the urgent need for eCommerce as a new core competence to support sustainable growth. Without eCommerce, a bricks and mortar business is restricted in its options to meet and fulfil consumer demand.
Of course, the needs of a single physical shop to move online to serve a single market or currency, or, a brand to reach market with a few products is a lot easier than managing a complex portfolio of products at scale and across international markets. The growth of 85,000 new entrants to ecommerce is likely to be at the simpler and less scalable end of the market, to enable smaller businesses to keep trading and get their products to the market.
At the larger end of the market we have worked seamlessly and collaboratively with our clients to launch new and engaging multinational sites for renowned brands like Liberty London, Christopher Ward, Fisher & Paykel, R.M.Williams and Kuene.
Shops opened on 15 June. What kind of opportunities has that generated for retail-focused tech suppliers like Tryzens?
While shops are now open our belief is the market has irreversibly moved to a digital-first imperative. This means that digital interaction across eCommerce sites, physical stores, social media and apps need to be harnessed. For a retailer to thrive going forward, the importance of having a single view of customer interaction across all channels and having a single view of stock to serve all channels has never been more important to offer personalised experience and maximum choice. Once the dust has settled with the practical challenges of reopening stores, the emphasis will change to ensure the online to offline experience is consistent and engaging.
How have you adapted your proposition since 23 March, and has COVID-19 forced you to evaluate the technology and services you offer for the longer-term?
Absolutely, we offer solutions that decrease the barriers to entry for clients of all sizes, easing cashflow and the costs of adoption. We reduce time to market through rapid deployment and Quick Start solutions, as well as reducing barriers related to skills and capability by offering managed services to get our clients up and running successfully and smoothly. eCommerce is an essential capability for retailers today and we are doing all we can to make this as accessible as possible for all businesses to help them gain access to the global online market.
Overall, have sales been lower or higher than normal in recent months?
Online trading has been huge, with clients seeing high double-digit and triple-digit growth during the pandemic. We have also seen the addressable market grow online as consumers were forced to try eCommerce, many for the first time. That experience will only serve to stimulate the future growth and reliance on this most scalable of storefronts. Of course, there are other challenges to manage: the logistics through the supply chain, from manufacture, to stock, to delivery, to end consumer, as well as the management of returns.
What will be the blueprint for success for tech suppliers in the retail space in the 2020s?
Tech suppliers and retailers have to deliver solutions, not the technology. Those solutions need to provide measurable outcomes that drive growth, engage customers and/or reduce costs of operating. Retail is at the very heart of the impact of consumerisation, where technology adapts, and trends are formed that can influence purchase behaviour dramatically. In a world caught out by COVID-19, retail is looking for rapid deployment and affordable solutions. These methods solve real problems and help retailers scale and pivot, in turn supporting customers through whichever channel they can best reach.
See next page for Recarta director Toby Harris' views
Three retail-focused VARs on how the pandemic has impacted their business
Bosses at Wanstor, Tryzens and Recarta open up on how they’ve fared during lockdown and the opportunity facing them as more consumer spending moves online
Name: Toby Harris, sales director, Recarta
Revenue: £10.4m
VAR 350 ranking: 282
How important are the retail sectors to Recarta's business?
Retail equates to approximately 20 per cent of the turnover of Recarta, across all areas of business from infrastructure sales to outsourced managed services platforms.
How tough has the last few months been for MSPs and other tech suppliers serving verticals as badly hit by lockdown as retail?
As a managed services provider in this sector we have seen an increase in demand for hosted systems, particularly around key applications such as ecommerce and secure remote working
To what extent have you had to make use of the government's furlough scheme?
Due to the nature of our mananged services and the multiple sectors of our clients we have not furloughed any staff. Indeed, in response to the increased demand in remote support we have been actively recruiting in our support division
Recent research found that over 85,000 UK businesses have launched online over the last four months. Has that shift to ecommerce happened among your retail customers, and - if so - what kind of help have they needed from you?
All our retail clients already have a strong ecommerce part to their business. Where we have seen an increased demand for our services has been around support and remote management of the systems and applications
Shops opened on 15 June. What kind of opportunities has that generated for Recarta?
As business returns to the stores we are seeing more movement on the infrastructure projects that may have been delayed during lockdown. We are also seeing more emphasis placed on projects that offer greater resilience, security and remote working enablement. Additionally, we have seen a push to a consumption model on both infrastructure such as hyperconverged and software.
We are also seeing opportunities around cloud back-up and disaster recovery solutions. Where clients are currently relying on tape back up on premise are looking for flexible and scalable solutions that they can either outsource to a back-up/DR partner or manage more easily remotely.
How have you adapted your proposition since 23 March, and has COVID-19 forced you to evaluate the technology and services you offer for the longer-term?
Not necessarily new services, but definitely a refined view on how we deliver and utilise the services.
Overall, have sales been lower or higher than normal in recent months?
On the whole, we have performed above our expectation during lockdown. There has been a decline in datacentre projects, especially in delivery, but as a whole our turnover is in line with previous years.
What will be the blueprint for success for tech suppliers in the retail space in the 2020s?
An understanding that it is going to be a challenging time for retail, but also a great opportunity for many if the support from the MSP and VAR is strong. I see an accelerated move to consumption model systems, both from a private and public cloud perspective and a move away from Capex to Opex operating models.
Wanstor, Tryzens and Recarta open up on how they've fared during lockdown and the opportunity ahead as more consumer spending moves online