The Future of the I.T. Channel & Integrity of the UK Market Structure

Over the past few years there has been a substantial change in the printer industry as manufacturers have sought to further consolidate their position and to prepare for a changing market spurred by the move towards paperless offices and a more eco-friendly outlook. Some of these manufacturers are aggressively chasing downstream revenues in a manner that does not always sit comfortably with the channel infrastructure, while others are expanding their offering horizontally. 

HP has sought to lead this change as part of its plan to substantially “disrupt” the A3 photocopier market. It purchased itself the underlying technology and infrastructure from Samsung, so that it could produce and run a modern laser photocopier fleet, while also subsequently purchasing Apogee in 2018 so that it had a direct route to distribution cutting short the channel. This is part of the HP stratagem to simplify the distribution route to increase profit margins, while also increasing its offering through a HP branded experience combining its full range of office products. This is certainly not a novel move by a brand, as Apple has already shown how successful a product linkage can be. The reaction to this move came first by Xerox who then mooted the purchase of HP, but this was subsequently abandoned.

HP was, however, not the only manufacturer to consolidate its position, and Kyocera at a similar time purchased Janus Spol, to increase its foothold in the growing Eastern European Markets. Canon had already integrated itself into the downstream markets through its acquisition of OCé Business Solutions in 2012. Kyocera also integrated itself at a similar time, through an array of acquisitions including Copytronics in 2014.Brother has sought to innovate by developing and releasing a cloud based MPS, while also expanding its other industrial markets.

This increasing focus on the downstream alignment by manufacturers, puts pressure on the channel by squeezing aligned markets. This has meant that the channel has had to innovate and expand its offerings in turn to maintain revenue growth and long term viability. Covid-19 has only accelerated these concerns. Distributor margins and revenue are suffering as manufacturers have begun to circumvent the distribution streams altogether. Distributors, have therefore started to expand their offering into the servicing side, which is then in turn disrupting the Dealer channel that has previously had to supply its own highly skilled infrastructure to support its product offerings. This has presented an opportunity for regional service providers who already have a highly skilled work force, as dealers seek to consolidate their offerings to reduce overheads. However, regional service providers have certainly not escaped this squeeze, and are themselves looking to expand their offering horizontally, to provide a better end user experience as well as to diversify their engineer skill base and revenue streams.

This squeeze and market movement raises several challenges for the parties involved:

The distributors does not currently have the infrastructure nor expertise to operate in the service side of the product market, and therefore there is a significant implementation cost, as well as concerns about being competitive in the market place. 

Small and specialist dealers are being pushed out of the market, as their viability in a competitive market place is being questioned due to the pressures placed on them by competition from the manufacturer, while the cost of the highly skilled infrastructure has not decreased.

Larger dealers are seeking to differentiate themselves from their competition by providing a broader offering, while also having to contend with more competitors crowding into the already saturated market. 

Six years ago, we had a look at the marketplace, and what we could do to prepare for the shifting markets.

Centrex Print Services Ltd is a quieter company than most, operating in the background with a mission to provide a good quality service and aftercare. It has developed and evolved over the last 25 years.

Centrex Group built an End to End service that operated 7 days a week, which is trade only, we looked after customers in Retail, Hospitality, Banking sectors ETC.

We decided early on to stay as a trade only Company and then review all the current services we currently offered a bit like a giant jigsaw to help find the missing pieces.

We had our own

1.      Logistics Warehouse

2.      Field Stock locations across the UK.

3.      Call Centre that looked after the Engineers and processed the calls raised by the customer.

4.      Field Engineers, which operated 7 days a week.

5.      Bench Engineers, which worked Monday to Friday.

So we spoke to a number of customers and 5 years on we have added the following services.

1.      Customer Printer Support Desk (hardware/software, answered on behalf of the customer)

2.      Managed Support providing the customer with a monthly M.P.S system for their customers

3.      Installation and support of ancillary software and devices such as Paper Cut.

4.      A hardware care-pack scheme.

5.      Customer ad hoc hardware repair service

6.      Project management of customer hardware roll outs

7.      Walk in and take over of existing products not covered by our customers

In anticipation of this market squeeze we have strengthened our ties with manufacturers and dealers so that we are able to bridge the gap, between manufacturer and dealer, when it comes to after purchase care. We became the sole warranty provider in the UK for Samsung and Canon laser products, while also an authorised repair centre for Brother, Epson, Kyocera, and a Premier Partner with HP.

We currently cover most EPOS equipment, and mechanical/electrical items in the Retail, Banking & Hospitality sectors as well as having expertise with products from all major printer manufacturers. 

We have maintained our status as a trade only company and have instead sought to expand our offering horizontally so that we can provide a great service offering to our business partners, overall increasing the quality of service provided to the end users. We are also expanding our coverage into the AV service market.

Our customer base, includes; distributors, manufacturers, dealers, and specialist dealers of varying sizes and we are currently looking to expand our service offering to cover software support on computers as well as system and networking integration, setup, and support.

Understanding, the ever increasing demands of the end user and consumers we are also developing a new APP that can be deployed by our partners under their brand allowing end users to book services directly into our call management system. This APP will also allow for our partners to advertise latest offers and other relevant information.

If you think we have missed a service please let me know I would welcome your thoughts on the above.