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Broadliners issue distribution ultimatum

Paul Kunert and Dominic Hall
Over-distribution in the UK channel has become so acute that broadliners have threatened to sever links with the vendors they believe are responsible.

As distributors struggle to increase margins and supply a dwindling number of resellers, some have demanded vendors reduce their distribution spread.

Sukh Rayat, vice-president and managing director for Europe of Avnet Applied Computing Components, confirmed it was putting pressure on vendors.

"We are telling manufacturers either you reduce the number or we will [sever ties]," said Rayat.

Graeme Watt, president of Tech Data Europe, said it was time for manufacturers to face the inevitable and trim the number of distributors they use.

"The market has been in a state of over-distribution for some time," he claimed.

Some vendors had not reacted quickly to over-distribution and others "have not reacted at all; they see it as a distributor's problem - but it's not", Watt argued.

In a chilling warning, he claimed one of the factors that led to Tech Data's decision to pull out of Norway earlier this year was "the market was over-distributed and manufacturers had failed to take any action".

But vendors dismissed the distributors' concerns.

"The deciding factor is business efficiency - an efficient distributor will survive in an over-distributed market and the inefficient ones will bail out," said Ian Snadden, director of SME and channel sales at Fujitsu Siemens.

Amanda Bibbey, marketing programmes manager for Lexmark's business printer division, said it cut its distribution spread earlier this year when it parted company with Computer 2000.

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