diHouse confirmed for DISTREE EMEA
by Stuart Wilson, Monday 20 February 2017
More than 20 Russian distributors will attend this week’s DISTREE EMEA consumer tech channel event in Monaco, giving exhibitors access to the country’s top partners. Among the Russian delegation is diHouse, a distributor established more than 20 years ago, which now carries a wide portfolio of consumer technology brands. Yuri Rodny, general director at diHouse, is keen to meet brands offering Intenet of Things (IoT) products at DISTREE EMEA 2017.
Rodny said: “Cooperation with diHouse includes not only the supply of goods and related activities, but also organising points of sale [for vendors], staff training, development and carrying out marketing activities designed to make partners’ sales more effective.”
“My interests lie in the IoT technology sphere, firstly, because it is a hot topic. Secondly, because our company is highly proficient in merging solutions provided by multiple manufacturers into a single solution for our partners,” he added.
Late 2016 showed some positive signs in the Russian market, according to Rodny.
“A stronger ruble and industrial output growth stopped GDP decline and the lowest ever inflation rate. Unfortunately, the decline in real income of the population persists, resulting in retail sales decrease – the expected decrease is about 5%,” he added.
Rodny continued: “The IT market demonstrated moderate 5% to 6% growth, depending on the product category, and the sales volume of tablet computers went down by 20%. Given that the comparison is with the 2015 crisis, it might be concluded that the recovery in the market is far from complete.”
“Only the smartphone segment saw growth, with the sales volume increasing by approximately 30% in 2016. The experts predict the smartphone market stagnation in 2017. The market shrinkage results in consolidation at both the retail and distribution levels,” he added.
Rodny continues to see a number of challenges impacting distributor business models in Russia.
“Distributor roles are extremely polarised,” he explained. “In the face of the market consolidation at the manufacturer and channel level, it is easier for them to directly agree terms and conditions and quantities. Per se, a distributor acts as a financial and logistics arm only, assuming financial risks as well.”
“On the contrary, given the products are consolidated with the limited number of manufacturers - for example in accessories or IoT - a distributor has to be an expert. If previously distributors used to work in one of the niches such as VAD or box moving, now it is required that one company wear two hats,” he added.
diHouse plans to retain a leading role as a volume distributor of mobile solutions, while simultaneously enhancing its VAD capabilities. The company has performed well in the last 12 months, growing its sales 40% and outperforming the market. Vendors working with Russian distributors do need to be aware of specific factors influencing the business relationship.
Rodny said: “Exchange rate risk and price management is important when ruble exchange rate volatility to major foreign currencies is extremely high.”
There are also shifts impacting on consumer behaviour in Russian consumer tech markets. Rodny believes that the market is polarising between low price products sold off the shelf and high price products where the consumer is prepared to wait to receive the product.
“The time of volume orders that could flood all the shelves of the retail chain is receding into the past. The interaction of a distributor’s and a retailer’s electronic systems is becoming more important. The retailer will offer the buyer a display case with the goods available, and any orders will then be fulfilled from the supplier’s warehouse,” Rodny explained.