When it comes to UK distribution revenues, Westcoast extended its lead over the chasing pack to nearly £700m in its latest year, according to CRN's latest rundown of the 45 Distributors You Need to Know 2022 (view parts 1, 2 and 3 here, here and here).
That was mainly thanks to a 15 per cent bounce in end-user compute revenues, sales director Phil Bell tells CRN in this exclusive interview. He opens up on whether double-digit growth is achievable in 2022, M&A plans and how Westcoast is shuffling its executive deck in the wake of MD Alex Tatham's departure...
Westcoast was the only distributor in our top five to grow in its latest year on record (according to the latest Companies House filings) - achieving an eight per cent uplift in UK revenues in calendar 2021. What drove that?
End-user compute really led the way (and I include Apple in that), growing over 15 per cent. Data Select was fully integrated from the beginning of last year and they had a record year, finishing on nearly £200m for 2021. They came over with some brilliant services focused around 5G and connectivity, which I think are going to be really prevalent in the coming months.
And then outside of end-user compute, our accessories and AV business grew and our cloud business - predominantly around Microsoft CSP - grew. Even the print market came back somewhat - print hardware was up nearly 20 per cent.
The surprise for us was enterprise, which in our world is Juniper and HPE. That enterprise business was flat, and I think that was just a consequence of people parking their infrastructure upgrades.
I think one of the big reasons we grew was also because the channel just asked us to do stuff that we didn't do before. "Can you deliver 3,500 Macbooks to individual end users and take back their old ones and bring it all back to site?" These are projects that we've never really been faced with before.
I really enjoyed your interview with Hayley from Distology the other day, where the headline was that she doesn't like the word ‘distributor'. I couldn't agree more. We are at £3.5bn pounds, so we are absolutely about distributing boxes from A to B and doing all the fantastic logistical stuff. But at least a third of our business now is being a facilitator and an aggregator of solutions, and that's what the reseller community has asked us to do.
With [Westcoast MD] Alex Tatham leaving, is there a succession plan?
We looked at the board and we've made the decision that we aren't going to replace the MD role
I'm assuming more of a chief revenue officer role. I still call myself a sales director - we haven't moved into the American terminology yet - but I care about everything to do with wholesale revenue. I also have a counterpart on our retail side that cares about every penny across the group for retail. And we have a fantastic CFO in Sunil [Madhani], two commercial officers and a COO. We looked at the board and we've made the decision that we aren't going to replace the MD role. Between that board I just named, we've got over 100 years of Westcoast experience, and 140 if you include [Westcoast founder and chairman] Joe [Hemani] as well.
Gartner is predicting a 14 per cent slump in EMEA PC shipments in 2022, partly due to unavailability of products, and you hear crazy examples of businesses having to buy laptops without USB ports due to ongoing shortages. As a distributor of all the big device brands, how bad was it, and is there an end in sight?
I read about that USB example, and it was only on a really small amount of product considering the volumes we're shipping - end-user compute is nearly £2bn of our £3.4bn revenues. It's got better, and I think end users and resellers have started to work differently. The channel is adapting well and forecasting 12 months ahead for projects. That's what the real cutting-edge VARs are doing. It's well documented that there's a good bit of stock in the channel and in vendors at the moment as, so I think everyone has to utilise what is here for the time being.
Judging from the quickfire Q&As we did with all the other distributor MDs, some of your peers are noticeably more downbeat than they were a year ago. What's your own take on the health of the market?
Yes, I would say it's more challenging. Westcoast always have a double-digit growth aspiration, and sadly I think we will fall at maybe five, six, seven per cent in 2022. I say ‘sadly', but if you look at Context, which is what we benchmark ourselves against, it has the market flat for the first six months of the year. Retail is a difficult place to be at the moment, and we think it might be flat for us this year. Enterprise - with HPE, Juniper and Microsoft - is leading the way for growth in our first half of the year.
Retail is a difficult place to be at the moment, and we think it might be flat for us this year. Enterprise - with HPE, Juniper and Microsoft - is leading the way for growth in our first half of the year
Yes, end-user compute is levelling out. But Apple is still rocking and is now the largest brand for the distribution market. We will continue to be the end-user compute distributor. We've got the majority share: if you look at Context, we're nearly 50 per cent of all mobile computing devices. So we're cautiously optimistic.
Westcoast haven't made any acquisitions in the last 12 months. To what extent is M&A on your radar?
There are none on the horizon at the moment, but they're never off the table and can happen quite quickly with a man like Joe at the helm. I think we as distributors have got a lot to do in that enterprise arena. If you just take something like unified communications with the whole PSTN switch-off coming in 2025, resellers are going to need a lot of support around that, as well as hybrid cloud. We certainly need to resource up in in those areas to support the channel.
Alex Tatham (pictured below) flagged up your recent partnership with Dell as his 2022 highlight. Dell already had its fair share of distributors, so what's Westcoast's brief?
Our brief is to do what we have done for the other [end user compute] brands. They have also given us a couple of specialist areas that they wanted us to look at - they're keen on systems integrators and MSPs.
What do you see as the main pain points for distributors right now?
I can whinge about fuel prices. The cost is just going to have to be passed on and we hate that because our job is very much to take costs out of the business.
But my two would probably be sustainability and talent. We all need to figure out a way of reducing trucks, reducing carbon, accelerating our carbon targets. We've got an aggressive net zero by 2035. But we've all got way more to do. I don't think we're set up to get the channel enough second-user tech, from the vendors down. How the vendors monetise that because they're not selling a new device, and how we can really aggregate that, I think is going to be one of our biggest challenges.
Through Covid, we took on a whole bunch of people from the airline, media and the travel industry, and I've got a couple of great examples of where they've just risen to become leaders in our business within a couple of years
And then also talent. Context will tell you that distribution is about £15bn and we think [the total channel, adding in direct and one-tier sales] is a near £30bn industry for the UK. And everyone is just out there, pinching everyone off everyone. And that's including my internal staff. The amount of internal moves we have at the moment, I've never seen anything like it. We as a channel just need to work harder at recruiting new people into this industry. Through Covid, we took on a whole bunch of people from the airline, media and the travel industry, and I've got a couple of great examples of where they've just risen to become leaders in our business within a couple of years. One guy who came across recently had left car sales because he wasn't going to get paid for 18 months because he only gets paid on when the car actually gets delivered - and new cars aren't getting delivered. We all need to work a little bit harder on getting talent into this brilliant industry.
