In many ways, wholesale equipment distributors are the electronic security industry’s unsung heroes. They are invisible to most end users yet ever increasingly play a vital role in ensuring channel continuity between the manufacturers and dealers such that those end customers get solutions that meet or exceed their expectations. However, those on the supplying and receiving sides of their services know how critical the right distribution partner is to their growth and ultimate success.
With that relationship comes both a world of opportunities but also serious challenges. While emerging markets such as managed services, interactive lifestyle enhancements, personal emergency response systems (PERS) and more are generating a lot of excitement, eroding product margins, intensified and more varied competitive forces, keeping pace with rapidly advancing technologies, more savvy and exacting clients, and evolving delivery mechanisms are among the trends causing fits for many providers.
To get a firmer grasp of how these dynamics are reshaping the distribution landscape, SSI queried executives from a half dozen of the industry’s more prominent wholesale suppliers. Participating in the roundtable were (in alpha order by company name): Michael Flink, president, ADI Americas; Jim Annes, vice president and general manager, AVAD; Jim Lee, president, JLM Wholesale; Ric McCullough, vice president of sales and service, PSA Security Network; Tony Sorrentino, president, ScanSource Security; and James Rothstein, executive vice president, Tri-Ed Distribution.
The six men discuss today’s most promising technologies and markets, how dealers/integrators can combat the dreaded margin squeeze, how the wholesale security distribution business is transforming to best meet market needs, ways in which they are adding value to the products and services they deliver to the channel, and more. Be sure to also check out the company profiles that follows the roundtable.
What are your three hottest products or product categories right now, and what do you believe is fueling their demand?
Michael Flink (ADI): The IP video surveillance product category as a whole has been growing immensely. We are especially seeing an in increase in IP infrastructure products including routers, switches, hubs, servers and more. The access control market has grown dramatically in the past few months as well. Specifically, there has been an uptick in installations at educational facilities. With recent security threats across the country, there has been an overall increased focus on installing high end video surveillance and high quality access control technology. Both the professional and general public understand the needs for truly high definition video as a forensic tool.
Jim Annes (AVAD): Our three hottest product categories are digital signage, home automation and video conferencing. Fueled in part by the latest generation of improved display technology available in new lines of LED screens from major brands, the boom in digital signage is about staying on top of hot technology trends. Similarly, growth in home automation has been driven by the availability of exciting new technology like the Nest Learning Thermostat, which is generating a lot of industry attention.
Jim Lee (JLM): Electrified exit devices, electrified locks and electric strikes continue to be popular in the access control industry. Providing access control for commercial openings is the driving force behind the popularity of these items.
How can security dealers/integrators combat margin squeeze and product commoditization?
Ric McCullough (PSA): As margins have continued to erode for dealers and integrators, we believe that managed services can really counteract that erosion. We offer solutions for hosted access, managed video and remote guarding services. All of these bring RMR and added value to an integrator, which, in turn, increases their profitability.
Tony Sorrentino (ScanSource): Dealers can bring in higher margin products or offer solutions that include higher margin products. By seeking out product lines that deliver a higher margin, dealers are able to bring something different to the table and sell the value of a unique solution versus a more commoditized or over-distributed product. Also, we believe they need to think beyond the box sale. They need to sell their value and services, which can create long-term relationships with customers, and establish trust and loyalty.
Flink: A value-add opportunity for integrators to get past just product and price is to offer multiple systems. The integration of alarm systems with Z-Wave products like lighting controls, locks, thermostats, window shades and more, opens up new opportunities for dealers to grow their business. In the commercial market, the integration of access control, video surveillance and intrusion technologies adds more value to the customer, and is seen as an important service rather than a commodity.
What is a product area or market you believe security dealers/integrators should focus more on because it is either perhaps underserved or has a huge upside?
Annes: Due to the recent surge in popularity of new mobile technology, products that integrate with the smartphone and tablet market via control, monitoring and display applications are ripe for an uptrend in attention. Customers are apt to focus on how their existing and preferred mobile technology will give them better access to security products.
Lee: We see increases in providing schools and health-care facilities with access control solutions.
McCullough: First would be total security solution sales to the public sector, including the education market. Second would be project financing — equipment rental and/or leasing can be powerful alternatives to an outright purchase.
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