We've heard it many times before. The industry is consolidating, and channel partners either have to bulk up or go niche in order to survive.
It's now become something of an overused cliché, but the hugely ambitious expansion strategies and growth rates of Europe's top resellers - Computacenter, Bechtle, Atea and Econocom - has created a huge void in the channel that someone needs to fill.
The wave of consolidation, which has seen Bechtle acquire Inmac Wstore, Computacenter acquire Misco Netherlands and CDW buy Kelway, has consequently done away with any viable challenger to snap at the leaders' heels.
Let's take the UK market for example. There's a £300m-revenue (€347.54m) gap between number two-ranked Softcat and number four-ranked CDW. There's another noticeable gap (£100m) between number nine-ranked WWT and 10-ranked XMA.
The same can be said for the Nordics. CPI spoke to the CEOs of Sweden-based VAR Advania recently, who told us that there's no reseller in the market today that sits in the $300m to $1bn revenue range, and therefore no real challenger to the comfortable leaders: Atea, Tieto and Dustin.
In France, the billion-euro operations of Econocom and SCC are being contested by the smaller operations of Computacetner and Bechtle. The former turned over €557.4m in the country in 2018 compared with Econocom's €1.39bn and SCC's €1.3bn. And Bechtle is only a recent challenger having entered the scene after acquiring €420m-revenue reseller Inmac Wstore last year.
CPI has already heard from one new challenger - print provider C'PRO - which is now moving into the infrastructure space and into further competition with the industry's established players.
As we keep hearing, money is cheap for those that are able to afford it, so now is the opportune time for Europe's challengers to make acquisitions and gain market share. Expect to see a rise in M&A and geographic expansion from Europe's "tier-two" resellers that sit just below the established elite.
We've already seen it happen over the last few years. Cancom now holds a commanding position in the UK after buying out OCSL last year and Novosco just two weeks ago. The combined revenues of each firm means Cancom now has an (approx.) £170m-revenue business in Britain and a geographic coverage to rival Europe's largest resellers.
Other European champions are also gearing up for big moves - Italy-based Lutech took on investment in 2017 and is gearing up to break into a new market through M&A. The Cisco partner grew its revenues by a staggering 54 per cent in 2018 and has quadrupled its revenues in the last four years.
Leader in the Nordics, Atea, has meanwhile revealed its plans to make a mammoth acquisition in Europe and will itself become a new challenger to other established players.
And let's not forget another breed of challengers looking to disrupt the status-quo in Europe. US resellers have shown a keen interest on this side of the Atlantic over the last few years. Insight's acquisition of PCM added some £50m revenues to its UK business and the industry is still waiting for CDW's next big M&A move.
European resellers should expect more competition from US players that see an opportunity here. Several established names in the US, like Presidio, Sirius or ConvergeOne, could be eyeing up European acquisitions based on the success of their larger peers.
While there's no question that reseller heavyweights Bechtle, Computacenter, Softcat and Atea have all prospered over the last few years and will surely continue to do so, there's a huge opportunity for mid-sized resellers to become genuine challengers and help close the enormous gap at the top of the channel.
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