| The established security distribution channel is being disrupted by a new trend towards specialist distributors – who offer more a more focused range of products and support services |
In the last 10 years a lot has changed within UK security distribution, but on the surface everything would appear to be the same.
The top two distributors remain the same, despite creditors at one and talk of a looming sale at another. However, they’re operating with a slightly reduced market dominance. Along with these, there are a few well-known names nipping at their heels, but somehow occupying a similar market position they’ve always occupied.
But a change is in the air. It’s something most people operating within the electronic security market may have noticed, but not paid too much attention to. The result of which is a few distributors in the market place that have all of a sudden shown significant growth.
High sale quality of specialist distributors
So, what are these companies doing that’s different to the established distribution channel? Why are they growing so fast when other more well-known names are dropped back?
The answer seems slightly counter-intuitive. What the established distributors have is diversity of product. What these other distributions have is a distinct lack of it.
Where the market leaders have many brands filling any number of requirements, there are other distributors who have purposely pinned their flags to a very limited number of masts. Although this runs the inevitable danger of limiting their scope, the one very important thing it does do is add a far higher level of quality to the sale. Think jack of all trades vs. master of one (or master of only a few in this case).
Better level of support from specialist distributors?
As with a product datasheet, where one CCTV camera can appear to be near identical to another despite there being a gulf in actual final delivered result, so it is with the support offered by alternative distributors. All will say they will go the extra mile with design assistance, training and more, but when you have a finite resource trying to offer this for sometimes 100 plus brands, the actual support given doesn’t come close to a similar resource concentrated on only a handful of brands.
Taking one distributor as an example, who has chosen to limit the products they offer, currently almost 50% of their customer facing staff are pre and post sales technical support and are primarily field based, getting involved in site surveys, prebuild and configuration and even the last fit commissioning. This is a level of support more established distribution simply don’t offer.
New rivals knocking the security market
Although it certainly isn’t required by all installers and integrators, more and more are looking for a distributor to be a business partner rather than just someone who has a box on the shelf. When you’re up against a deadline or an issue arises on site, knowing there’s a team of people ready to assist in resolving these with you, even to the point of being up the ladder next to you, can be a life saver. Once you’ve experienced this and seen the value this adds to your business, suddenly saving a few pounds on a camera doesn’t seem such a good deal.
So why the change? This is a lot of work for a distributor, and anyone with a hint of commercial awareness can see this would require higher margins to maintain in a market that seems to have its margins constantly eroded.
| Installers and integrators are looking for distributors who will act as business partners - a knowledgeable team who can help with deadlines and arising issues to add value and build up their business |
The answer to this I think lies one stage further back in the supply chain – the manufacturers. Unless you’re coming out of a 10 year hibernation, you can’t have missed the sea change in the manufacturer make-up in the last few years. Once dominated by names like Bosch, Samsung, Honeywell and more, suddenly we have Chinese companies like Hikvision and Dahua knocking the market for six.
These two previous sleeping giants of the security industry have been supplying you with a large chunk of the CCTV products you’ve been using for many years, it’s just not been under their brand and it’s unlikely you even knew. Now with a recent change in direction from both companies, these same products are now available with their brand name on.
New players fighting with price drops
This has had one key effect, the price of the cameras and recorders we use has dropped significantly. And we’re talking big drops. You can now purchase a full HD 1080P IP camera for the price you were paying for a traditional entry analogue camera. Need a 16 channel NVR? Now yours for less than the cost of the hard drive you put in it. And these aren’t necessarily bad products either.
The knock on effect this has had is on the other manufacturers themselves. Where once you had a large product middle ground where pricing was in the Goldilocks zone of not too high, not too low, and the products were of suitable quality to warrant the cost, now we have these mid market products at entry level pricing.
Established manufacturers feeling the heat of competition
This is a big headache for the manufacturers who traditionally occupied this space as they’re now faced with a stark choice of either trying to elevate themselves out of the arena they’ve occupied for so long, or trimming all the fat off their sale and circling the wagons ready for a fight.
Both options have their pitfalls. Too many people operating at the higher end of the market makes for a very crowded area for what is a longer sale with tougher expectations and regulations. Stand toe to toe with a government backed $3.88 billion organisation and you’re very likely going to get a bloody nose.
With all the change in the market, some distributors have decided to pick a side who they believe will support (and maybe even pull) them down the road. We’ve seen the growth this has given Hikvision’s distributors, and similar results are now happening for Dahua distributors.
Specialist vs. generalist
With either specialist or single manufacturer distributors, there is acceptance there will always be applications they won’t have the product set to support. But if you were a user of one of these brands, would you rather purchase from a specialist distributor that knew it inside out and was willing to stand side by side with you, or someone that can’t possibly have the resources to support it fully?
This is obviously one man’s viewpoint of a highly complex situation involving many many companies, but few would argue with the impact some manufacturers are having.
And to end, a crystal ball moment. If you’re primarily operating outside the CCTV arena on other electronic security products and think this doesn’t affect you too much, stay tuned. When you have the aggressive growth plans that some of these manufacturers do in what is a finite marketplace, how long until you start looking over the wall at what your neighbour’s got and decide you want a piece of that action too?