Will the distribution ‘big boys’ continue to offer choice as they acquire more companies?
1 min read
The distribution sector is shrinking rapidly. But it's not the revenues, it's the number of companies. The reason? The 'big boys' are continuing to acquire those organisations stuck in a no man's land, where they are seemingly not large enough to play in the 'first division' yet too big to be niche specialists.
There was a brief frenzy some years ago, when it appeared Arrow and Avnet were going to buy everything in sight. Some calm was restored, but the bigger players have continued to pick off targets as and when it made sense. In the UK, for example, we've seen the Memec Group and Abacus acquired by Avnet in recent years. Arrow, meanwhile, has made more than 30 acquisitions in the last 10 years or so. Now, it's the turn of MSC Gleichmann to be acquired, this time by Avnet.
At one end of the spectrum are the broadliners, while the high service organisations such as Digi-Key, Mouser, element 14 and RS Components, sit at the other end. The gap between them is shrinking and it's those companies in that gap who are the targets.
While acquisitions, as such, may not always be bad things – there should be benefits such as economies of scale – they do reduce choice in the market. The question is, therefore, will companies such as Avnet differerentiate their offering such that they maintain the 'feel', if not the 'look' and, by doing so, continue to offer choice to the market?
