Disties debate an uncertain future

Distributors at last month’s Distree XXL event were left in no doubt that they need to assess the true worth of vendor alliances and scrutinise their actions in the wake of the downturn. Julian Pletts was there to get all the reaction.

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By  Julian Pletts Published  March 2, 2009

Distributors at last month’s Distree XXL event were left in no doubt that they need to assess the true worth of vendor alliances and scrutinise their actions in the wake of the downturn. Julian Pletts was there to get all the reaction.

It was inevitable that this year's Distree XXL event in Monte Carlo was going to be dominated by the financial crisis, the credit crunch and what distribution houses can possibly do to avoid the gaping holes that have opened up underneath many of their markets.

The tone at the event, which brought together leading members of the EMEA distribution channel, including a large Middle East contingent, was however, far from downcast.

Inevitably, almost every conversation revolved - some way or another - around when the slump might end. This is, of course, a question that most distributors would pay a fortune to get the answer to right now, but at least members of the EMEA crowd seemed to feel able to rise to the challenge.

"My sentiment is that the worldwide economic situation is bad and that situation is also coming to the Middle East and my market - Iran," reflected Amir Banasaz Nouri, managing director at Iranian computer components and accessories distie Board Pardaz Rayaneh.

Nouri says that although credit insurance and extended payment terms from vendors remain relatively non-existent in the local distribution channel, markets such as Iran are still slightly buffered from the business effects of the financial crisis - largely due to the fact that distributors such as Board have well-established ties with its channel and can offer up to 90 days' credit to customers.

"We give three months' credit to all of our partners. This is because when we go to choose a customer we get as much information about them and from the market as possible. If we approve them we are able to provide credit," added Nouri.

Recruitment of new vendors to the portfolio and the strengthening of existing channel ties appeared just as important to the assembled masses in Monte Carlo as they have ever been and a central strategy for navigating the choppy waters of the financial crisis.

What was also clear is that vendors are going to have to earn their place in each and every market, and prove, to a much greater extent, their worth to current and potential partners.

Similar to how the financial crisis has given tenants in Dubai previously non-existent bargaining power with real estate owners, distributors now find themselves in a much stronger position to dictate terms when signing up new vendors.

In response to the fears of EMEA distributors and their desire for somebody to provide an indication of what direction they need to take, the organisers lined up keynote speeches from market research house GFK and Julian Dent, managing director of VIA International, a distribution channel consulting firm.

Dent, who is a pre-eminent expert in distribution channels following over 25 years' experience in the business, made it abundantly clear that distributors must be even more critical in their analysis of what every vendor partner they work with contributes to their business.

Among many other points, he suggested that a large number of distributors were not aware of the internal growth capacity each vendor affords them. Simply put, this means the percentage that doing business with a specific vendor will allow them to grow their own business in the future.

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