Fasten your seatbelts

Fasten your seatbelts

Good companies will continue to thrive in a tight market but the pressure is building for some

With the local financial year now finished, attentions are fixed firmly on planning for the next 12 months and executing on strategies for the current quarter.

Market conditions suggest it would be a good idea to stay seated with your seatbelt fastened for what could well be a turbulent trip. As always, good businesses will ride out the storm but it could be a long six months for those flying a little too close to the wind.

We haven't had too many calls at ARN in the last few weeks from people wanting to tell us what a lousy final quarter they had, but you don't have to scratch too far below the surface to get some indication of what's going on.

Retail is usually first to feel the pinch and it has been well documented that this market has slowed down significantly in recent months as high interest rates and inflated petrol prices put the bite on discretionary spending. The situation is not quite so worrying in the commercial market but there's plenty to suggest it's headed in the same direction.

Events over at Commander have had a massive impact - when the country's largest reseller sheds hundreds of staff and decides to stop pushing tin, you can't expect anything else - and a number of its biggest suppliers have felt the pinch.

Looking back, the mass redundancies Commander made earlier in the year couldn't have happened at a worse time. In a buoyant market those staff would simply have popped up at a competitor and mopped up the contracts but, set against a background of an increasingly cautious market, a lot of those projects were put on hold.

Some Commander competitors managed to do very nicely thank you out of its demise - Data#3 picked up a large number of staff, most notably beefing up its Microsoft licensing business across the country, Leading Solutions picked up a number of major contracts that helped sweeten its numbers in the final quarter, and Datacom is also thought to have benefited significantly. Others, however, hired Commander staffers thinking they would bring business with them, but got their fingers burned when customers put those projects on the back burner.

Looking elsewhere, a number of industry sources suggested that Cisco missed its local targets for the past couple of quarters. A spokesperson said it would not comment on speculation but, if it's true, there's surely no greater bellwether for a slowdown in commercial spending.

Lenovo's appointment of Dicker Data last week is another important indicator. The official line was that the appointment would help bolster SMB sales, which is all well and good but that's core business for its three existing distributors - Ingram Micro, Cellnet and Synnex. You can only presume that the addition of Dicker is a direct result of these three partners failing to deliver enough sales for Lenovo to hit its own targets.

I've always been of the view that this market isn't big enough for a vendor to have four disties so don't be surprised if one gets shown the door in the months ahead.

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