Expanding business

INTERVIEW

This month we talk to Michael Lawrence, Regional General Manager UK&I at ADI Global Distribution to find out more about the company’s move into a new technology market sector and its plans for the future

PSI caught up with Michael last year just after the first lockdown ended in the summer, which meant that the second one wasn't even in anyone's mind at the time. This time around we met him just before the originally proposed Freedom Day of June 21st to find out what had happened with ADI since our 2020 chat.

How did the market fare during lockdowns? The business has done really well through the pandemic staying open throughout, which was really pleasing and I think we've seen a level of resiliency, in a similar way to what the whole industry has. We lost minimal trading time at a couple of our branches as a result of the need for staff to isolate.

The businesses itself has really been positive and we've continued to launch new brands and new products in that time. In addition, we have continued to invest, both in terms of people and infrastructure and as we're now [at the time of the interview] coming out of Q2, we're really positive about the future.

You didn’t even reduce the number of staff working in the warehouse? We've actually added heads into the UK business this year and we've continued our expansion into Ireland adding heads there too. Our overall inventory investment in the business has increased quite substantially and that is enabled by the fact we've been in a purposebuilt facility for nearly two years after we had outgrown our previous premises. And if you look at our expansion, particularly into the professional Audio and Visual range, with the likes of 86” and 100” large format displays, that is business we could only develop and invest in by having this new facility in Greater Manchester. the warehouse at each branch that supplements the offering from our hub. We want to have training facilities in all regions plus hospitality facilities for staff and for customers.

We have further branch relocations planned for later this year and over the next few years in addition to investing in refurbishments and upgrades in all locations. It’s great that the global ADI business is backing us financially with these investments.

Five years on from the Brexit referendum has there been any impact on business or is the picture muddy due to the pandemic? Brexit in Q1 2021 caused challenges for any business that exported products out of the UK, or imported products from the UK. We have a global trade compliance function so with that skill set in-house we were able to mobilise quickly and our freight partners did a really good job.

Like most businesses there were some challenges to overcome; moving product into Ireland was where we saw the main challenges, but problems with bringing products into the UK were quickly overcome. We were also able to help a number of our larger installers manage their cross border projects. As we see it today, Brexit isn't really on the agenda.

What will you do about branch design? Will you have product out front or not? The model in the Oldham branch and in our new branches in Kingsbury and Dublin are all of the 'new' style with stock displayed front of house to show installers the full range of products we can offer, supported by a substantial holding in “We have further branch relocations planned for later this year and over the next few years in addition to investing in refurbishments and upgrades in all locations”

INTERVIEW

“A lot of our customers that install security systems also have Audio Visual interests or even Audio & Visual businesses that market themselves separately”

(continued from previous page)

What about the impact of the component shortage? We're seeing it impact across a multitude of vendors and at different stages of manufacturing with availability challenges and lead time delays. Some of the shortages are obvious such as chip components, glass being used for vaccine vials rather than displays and monitors etc and of course there are container shortages stopping people from being able to bring product in from overseas.

For our supply chain team it is now probably as challenging an environment as it has been through Brexit and when we relocated our hub. Managing availability and providing installers with access to everything we sell is probably is our daily number one challenge, it’s a green fee now in an increasingly competitive market.

Nowadays you see plenty of companies working with multiple distributors, so is the day of the exclusive distribution deal over? Not entirely, we have exclusive deals with some manufacturers and brands, but I think the model has shifted where manufacturers want their product to be available to the broadest range possible. Therefore a multi-distributor option is viable, plus there are more distributors in the market now than there's ever been. It's a market in which we've seen more activity and acquisition recently than in the last ten-plus years. So I don't think it's a trend, it’s probably more the kind of a new reality. What I would say is that what the installer wants is convenience as they are time poor, managing multiple projects and it is that convenience that distributors must provide.

What do you think of all the distributor acquisitions that have been made recently? The deals that we've seen completed have different strategic goals and they make sense for different reasons. Some are going to require a significant amount of work where it is necessary to make two businesses become one - some will integrate more easily. What we have to do is offer customers a convenient solution and a best in class service offering so they continue to buy from us. Obviously it poses for us an element of competitive threat in that their offerings become much broader. It's a market that I think still has consolidation opportunities within it.

You mentioned that you're moving into the pro AV side of things. Is that something that you think security installers will be looking at as well? The UK security market is quite saturated and I think we're all looking for that adjacent space that we can deliver double digit growth from. Audio and Visual has been incredibly successful in our North American business and we benefit from their backing and their expertise. A lot of our customers that install security systems also have Audio Visual interests or even Audio & Visual businesses that market themselves separately. Our approach is twofold; the first is to look at the services and products that we can offer to our existing customers, and secondly take more of a business development angle to Audio and Visual installers. What we're finding is when we identify those opportunities with Audio & Visual installers they are actually buying security as well. So there's definitely an adjacency and synergy between the two. A great example of this is in our Audio portfolio, brands like Bosch, Axis and Penton all have products that integrate directly into security applications.

Will you look for other new sectors to move into or will you focus on developing the offering you currently have? One of the biggest success factors for us is being very good and what we need to be very good at. Of course there have been instances when we've not been quite where we needed to be and that cost us especially given the strong competitors in the market, but that was in the past. We are always on the lookout for new opportunities. Yes, there are things that we're looking at, but I think getting the investments in Ireland and professional Audio & Visual right is where our focus needs to be now.

Listen to the full interview with Michael in the PSI Security News Podcast

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