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Distribution

Delivering the goods

Distribution Special Focus
Dec 6 2007

It’s been a challenging year for the UK distribution sector – and the Christmas period promises to be as hectic as ever. But, as Tim Ingham discovers, the market is still very positive about the next 12 months…

Of all the pressures that come from beavering away in the industry in the lead up to the Q4 gifting frenzy, distribution companies bear the brunt. Not only are they responsible for ensuring that publishers’ frenzied delivery demands are met, but they’re also in the firing line from retail when it comes to that age-old issue of stock levels.

But do we pity them? No. Surrounded by the glitz of marketing spends and flashy TV campaigns, many industry figures tend to see what they do as downright unglamorous.

But right now, these goliaths of the trade are on the front line, rolling up their sleeves and getting their hands dirty – and ensuring the avalanche of top Christmas releases are given the chance to succeed they deserve at retail.

It’s not as if distributors don’t already have enough to worry about.

From the rise of digital distribution to the threat of increased competition, you’d think that most of the market would have good reason to pack it in and move to another area of the industry.

But as this distribution special focus shows, there are a lot of clever people to be found in the UK trade. And they are all finding innovative ways to expand their business – and turn a handsome profit.

“The supply chain is getting tighter each year,” admits Trilogy MD Matthew Allen. “That means a company like Trilogy has to have the right systems and people in place to manage the process. Many times this year we’ve have vehicles waiting to deliver goods, before the product has physically arrived. But we work very closely with all of our partners to ensure we achieve what’s required.”

“There is a need to continue to raise service levels and bring new ideas to the market,” adds Koch managing director Craig McNicol. “You fight for growth in this sector; it does not come naturally. Stand still and you will go backwards. “It’s that quick.”

Companies have diversified more than ever in 2007 – whether through expanding their product mix, or in more innovative ways.

Sweden’s Game Outlet enjoys a turnover of e15m thanks to its one-of-a-kind business model, which includes a promise to build retailers ‘the pallets they need’ for instant displays. And the firm is looking forward to making its mark in the UK next year.

“The continued expansion of our pallet concept in the Nordic countries with many new customers and a good number of old ones that are very happy with sales of the Game Outlet pallet concept,” comments UK sales manager Pelle Lundborg.

“We continue to roll out our pallet concept to new customers in the Nordic market but would also like to see our concept materialise in the UK next year as well.”

Far from running scared of the digital age, the vast majority of distributors have, in fact, embraced the concept as best they can – not least by offering a first class online business to their clients.

Bedfordshire-based retro games specialist Games Without Frontiers is all set to make that leap. Managing director Peter Walking explains: “In 2008 we are launching our Wholesale site – we have revamped it with extra functionality that will enable us to accept pre-orders on new titles, back order older stock, and feature bundling deals and special offers.

“With the recent addition of the Prism DVD stocks then we can cater for the wider entertainment market.

“Our headcount is growing as the workload increases, and if anybody out there is looking for a challenge and a change of direction in 2008, then we will consider employment for the suitable candidates.”

But all of this success doesn’t mean that the sector hasn’t suffered. Everything from the cost of petrol to central warehouse delivery points have, at times, threatened to halt the progress of some of the biggest names in the business. And then, there’s the decline of the independents.

“The independent sector is unfortunately reducing year-on- year,” says Pinnacle managing director Peter Sleeman.

“Another problem is that publishers have the option to send their day one stock directly from the manufacturer, which is an added challenge for the traditional distributor.

“Fortunately there is more to distribution than providing a day one logistics solution, as constant stock availability and quick replenishment of product in demand and providing a quality sales service will always be a key requirement for retail,” he continues.

Managing director of Gem, Chris Peacock, points out that: “Distribution has become a very competitive area, especially in the leisure sector. Keeping margins at a sustainable level for everyone and competing against customers sourcing direct is a challenge. It is key to have a significant point of difference such as our unique added value model.”

For some, distribution might still carry that unwarranted reputation for being unglamorous.

But what is sure, is that it is just as vital now as it ever has been for the overall success of the UK industry.

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