Exertis head positive for future expansion following stellar year

Hitting a year in the hot seat, Tim Griffin thinks recent and new acquisitions will solidify a healthy position

Tim Griffin (pictured) has just completed his first year in the Exertis hot seat. The 52-year-old former Dell EMC UK chief paints the picture of another stellar year for the hardware distributor, with operating profit in the year to the end of March up 35 per cent from £48 million to £64 million.

Acquisitions in the last couple of years have also allowed the company to expand geographically and give it a strong foothold in areas such as accessories and refurbished devices.

Before joining Exertis, Griffin served 14 years at IT giant Dell and subsidiary EMC in a variety of senior and international and global roles, most recently as CEO and general manager of Dell EMC’s UK business. A rugby fanatic, he is also non-executive director for the Welsh Rugby Union, with a son who plays rugby for the Bath senior academy. 

His appointment at Exertis saw the firm’s former UK and Ireland MD Gerry O’Keeffe promoted to the newly created role of international MD, tasked with the company’s expansion in existing and new territories. 

The firm has a foothold in the US after acquiring audiovisual (AV) distributor Stampede a year ago, and is now looking to delve deeper into the Asian market to further its financial growth. 

Griffin says that recent acquisitions already had a presence in Asia, giving the firm a start, but a fresh buy is on the cards to give it a more direct foothold. A £370 million war chest has been approved by parent company DCC, to be shared between Exertis and the three other DCC divisions. Mobile remains a key area of growth for Exertis alongside pro AV.

“We have a very healthy balance sheet, which points to our level of ambition,” says Griffin. “DCC has spent over £900 million in the last 12 months, with the rate of deploying capital increasing over the last 20 years. Last year, only three per cent of DCC’s capital was spent on Exertis; this year, it will be over 80 per cent.” 

Of the company’s ambitions for expansion, he says: “It’s about building our capabilities where we already have a footprint, as well as in new territories through specialist people we have working for us. We see ourselves as providing experts who can drive value to vendors and enable their supply chain.”

Despite a declining market for smartphones, with analysts reporting a 4.5 per cent dip in sales worldwide last year, Exertis sold two million devices for core brands Huawei, Nokia (HMD Global), LG, Samsung and Sony.

Exertis head of mobile Simon Woodman explains: “There’s growth across all of our main manufacturers; we rationalised things down by taking out some of the tier-two and tier-three vendors so we can really focus on our main ones properly. We’ve learned the lesson to stick with the big guys and develop our relationships with them.” 

He says there are also vendors that are good to have on board to cater to certain segments, such as Doro for the elderly market. However, he says, “we can’t be all things to all customers even though we’ve got the biggest sales team in the channel”.  

Vendor challenge
It’s no secret that three of Exertis’ top tier manufacturers have, however, had severe recently difficulties. Sony and LG saw downturns, and we all know the situation with Huawei.

In the UK, Sony shipped barely 450,000 devices, a massive drop from 3.6 million in 2014 (IDC figures). LG, which was a market leader in 2008, saw its market share slump to just 0.2 per cent, shipping only 292,000 smartphones last year according to Kantar Worldpanel. 

But Woodman has faith, backing the three vendors to get back on their game. Exertis will not be dropping these players from its portfolio, although the company admits that some of their recent product launches have not captured the imagination of many customers.

“If they haven’t got the product offering, then we’re going to struggle to make too much impact for them,” says Woodman. “However, we are absolutely behind them with support. All vendors go through lean patches, especially in this difficult market. But as 5G starts to develop, there will be fabulous opportunities, strategies and ideas.” 

Woodman agrees that the big legacy brands have been hit hard by the new wave of challengers from China such as OnePlus and Xiaomi – but he says smaller vendors in the lower tiers will be affected most. 

“New vendors will hurt tier-two and three vendors,” he says. “We’re concentrating on tier one, and the others can fight in that space in the market. They’re going to struggle moving forward against reputable brands. 

Griffin points out that Huawei has managed to take significant market share through aggressive marketing and innovation – showing the continued potential of tier-one players despite the challenge. 

Growth areas
Exertis meanwhile, sees good prospects in areas such as device-as-a-service (DaaS), accessories and refurbished devices. 

The company plans to launch a DaaS offering this month, helping organisations optimise savings by bundling devices, services and software under a single subscription. It also recently appointed ex-Tech Data executive Andrew Jones as business development manager to head up the DaaS team (see box below).

Woodman says DaaS is a great way for resellers to streamline their business and save money by enabling them to pay monthly for their smartphones rather than up front.  

Separately, Exertis’ acquisition of accessory company Kondor last year has given the distributor much more traction to sell accessories alongside devices.

“Kondor was an incredible acquisition for us,” said Woodman. “It has key relationships with all the operators and great products that we can manage and develop. We sold over two million phones last year and it was crazy we weren’t attaching accessories before.”

In addition, the company’s scope for offering refurbished devices was given a boost with its acquisition of service and repair organisation MTR two years ago. 

Woodman estimates that two million of the 19 million phones expected to be sold in the UK this year will be refurbished devices, due to the rising cost of handsets and a more positive attitude among consumers towards pre-owned devices.

“Sales of refurbished devices are exploding across all channels, whether B2B or retail. This should be taken seriously,” he says.

Woodman adds that 5G is also front of mind at Exertis. “No one will understand the power of 5G until it is in its final form, he says. “I predict new vertical sectors will emerge next year. Superfast 5G broadband could transform society and could replace fixed line broadband. Once the 5G coverage is national why would you have a fixed line connection?  

“The key thing is to make sure we’re with the manufacturers that can deliver this exciting new proposition.”