The Interactive Products User Conference 2006, held on Tuesday at the Radisson SAS Hotel at London’s Stansted Airport, was different from those of previous years. Firstly, it was Interactive’s biggest-ever conference (hence the new venue). And secondly, there was no new product to be launched this time.
Instead, the conference focused on what Ron Wotherspoon, managing director of Interactive, claims to be of even greater importance than a new piece of software: partnerships and closer alliances between the UK’s dealer community and its wholesalers.
"This is the age of the wholesaler," Wotherspoon said. "We have two great wholesalers in this country which are perfectly trade-dedicated. It’s a wonderful age we’re moving into. A dealer group cannot replace the wholesaler, but we need to get the choir singing the same song and it’s about bringing the dealers and the wholesalers together. That’s what I get a kick out of."
To reinstate the importance of the dealer-wholesaler allegiance, Interactive invited new Spicers CEO Rob Vale, ISA’s Kevin Downie and Kingfield Heath’s Alan Barclay to speak at the event among others.
In his first major public address to the industry, Rob Vale treated delegates to a motivating speech about the excitement he felt over his new role and his vision for Spicers. "It’s week eight in my new role and I’m absolutely excited to work with ambitious entrepreneurial people in this business who have a clear vision of what they want," he said. "In the last two years in the corporate world, I’ve been worn down with all the politics of inward focus. But the experience has shown me what a superb advantage dealers have over international players when it comes to sales, and nationals are very envious of you for that."
He cited office furniture as an example. "Nationals don’t like furniture; it is logistically difficult for them with horrendous return rates. But for dealers on the other hand, office furniture is a tremendous opportunity."
Vale also praised "the strength of Spicers" and what it had accomplished to date, but said he thought it had yet to reach its potential. "My mission is to help it achieve that," he said, listing a planned reorganisation of sales functions and a stronger focus on EOS. The thanks he offered the industry at the end of his speech was met with astounding applause and praise from Wotherspoon, who said: "It’s interesting times for Spicers, you can see why he got the job!"
Vale was then followed by Kevin Downie, channel director at ISA. It marked the first time an EOS wholesaler had spoken at an IT conference. Downie told delegates that he believed OP dealers were not getting their fair share of the EOS marketplace and spoke of the benefits of forging EOS partnerships.
Alan Barclay then took to the stage to offer an update on Kingfield Heath’s services in support of dealers. He described how his company had improved service levels by investing in the channel and had upped its delivery success rate to 99.5 per cent so as to eliminate seasonal variations of the past.
He also spoke of the cost-cutting initiatives he had implemented to improve efficiencies and how the wholesaler’s moves should evoke trust among dealers. He said: "When dealers say ‘should I trust the wholesaler?’ they should look at the gross margin declines that most wholesalers are experiencing due to the change in mix, and see the changes we are implementing for their benefit. Over 95 per cent of Kingfield Heath’s sales come from the independent dealer channel – we are on the same team as dealers because we have mutual objectives."
To help customers succeed, Barclay spoke of expanding the wholesaler’s range, especially in computer consumables, the launch of a new retail catalogue, improvements to its website and plans to further invest in the supply chain.
Other speakers at the conference included David Carroll, chairman of Advantia, who discussed the merits of supply chain fusion, and dealers Jeff Whiteway of OyezStraker and Serena Musgrove of PC Office, who offered their perspectives on how Progress (Interactive’s software) is working for their business.
Wotherspoon believes Progress is now at an important moment in its history. "After the first two years of purgatory investment in Progress Online, and sorting out the problems, we are now running smoothly, and our role in the trade is as valuable as ever," he told OPI+ in a press briefing after the conference.
But despite the popularity of Progress (there are currently 230 dealers using the software), the nature of Progress Online (which the larger half of users now use) means that Interactive no longer receives a base charge for software licences and maintenance contracts. Progress Online revenue accounts for £200 million ($352 million) in sales per year, compared to total revenue of £1 billion. Instead, users pay monthly "per seat" by direct debit, which means that dealers can terminate the agreement whenever they wish. But the flexibility of this system has helped to attract many small dealers to Progress Online, said Wotherspoon.
Wotherspoon is confident that Interactive will get good take-up over the next few years. The company is hoping to increase Progress Online’s sales by 10-20 per cent by this time next year. "We have simplified the new system for the ordinary dealer and we hope that gradually we will wean people onto it."
He admitted that taking the traditional system and keeping it going has not been an easy ride which, he says, is partly down to dealers’ attitudes, often a fear of change.
However, something that dealers should fear more than change, he believes, is the cleanliness and accuracy of their data. This is why Wotherspoon, along with Spicers and Kingfield Heath, is putting pressure on manufacturers to get data of their products uploaded onto the database. As many as 118 manufacturers are currently on the database, but progress is slow. "Dealers need clean data and OPDEX is vital for the industry. Since I stopped as chairman of BOSS, people think that I have stopped caring about this initiative, but this is not true…One day I would like to see the database fully populated – that’s the dream and it ought to be happening. Until data is clean and OPDEX is used, dealers continue to bear costs of data."
"Dealers often think, ‘if it ain’t broke, why fix it?’. The megaphone has got to be quite loud," he added. "If you do what you always do, you get what you have always had. It is also dealers’ attitudes that have thwarted closer ties with wholesalers, an issue that the conference’s theme attempted to deal with. It’s all about partnerships – everyone in the chain holding hands and heading in the right direction."
And as Wotherspoon concluded: "Together we’re ahead of the game in the UK. We are solving business problems."