Distributors, CDW Adjust Market StrategiesBy Jacqueline Emigh | Print
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IT distributors and online retailer CDW are making adjustments to adapt to the market's ebbs and flows.IT distributors and online retailer CDW Corp. this week outlined a range of new moves aimed at customers in key geographic areas and vertical markets.
Bell Microproducts Inc. took the opportunity during a supply chain conference in New York to reveal it is acquiring MIE, its $300 million European counterpart; CDW discussed its restructure of its corporate sales force along regional lines; and Arrow Electronics Inc. explained its "Back to Basics" strategy.
Bell Micro's CEO Don Bell said the acquisition was driven by slowing sales in Europe.
In its European markets, Bell Micro will reduce non-personnel costs, while exiting non-strategic and low-margin product markets, such as low-end disk drives, and closing some of its smaller facilities.
Bell Micro will "pull out of Sweden," a less-than-$20-million operation that costs the distributor about $750,000 annually to support.
However, the company will continue to distribute to volume accounts in Sweden, transitioning management of the accounts to its operation in the United Kingdom, which has grown 14 percent over the past year. Bell Micro's arms in the Netherlands and Belgium are doing well, too, according to Illson.
Bell Micro is also entertaining the possibility of making more European acquisitions, the CFO said.
Meanwhile, product distributor CDW plans to double the size of its international corporate sales force, as well as reorganize the operation along regional lines, said John A. Edwardson, CEO.
CDW is planning a new 150,000-square-foot global distribution center for Las Vegas.
Edwardson attributed company expansion over the past decade to its employee training program and diversification and vertical market strategies.
"Essentially, we're a large VAR," said Edwardson. "Ten years ago, we were all about the desktop." Today, though, the company plays in the entire computer market, with the exception of the consumer and high-end enterprise spaces, he said.
CDW has seen particularly high growth for printers and servers over the past year. Lower pricing for servers has eaten into volume growth, but unit growth has been "significant," he said. Printers have enjoyed both unit and volume growth.
On the vertical side, CDW recently added a healthcare industry group to a previously established government sales team. The government arm covers federal as well as state and local markets.
The company has been exploring additional verticals, too, including law firms, according to Edwardson.
Arrow Electronics Inc. is now pursuing a regional strategy through a new program called "Back to Basics," which drills down on "what it is that customers really want," said Paul J. Reilly, senior vice president and CFO.
In late October, the company rolled out plans to buy German-based supplier DNSint AG, along with 70 percent of Taiwanese supplier Ultra Source. By the end of this year, the company will wrap up internal deployment of a global financial system, Reilly said during the conference.
The distributor is also implementing asset management and inventory management systems that are expected to show big results in cutting supply chain costs by 2007.
Currently, he added, Arrow is placing a larger emphasis on selling software, storage and services into the midrange market, which is experiencing relatively strong growth industry-wide.
Large suppliers such as IBM Corp. and the Hewlett-Packard Company are now "putting more [product] with the distributor" in the midrange arena, Reilly told the investors.