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Distributor Focus – Germany

David Davies takes a look at distribution in Germany, and how it will respond to an unsteady Europe in 2012.

After an impressive resurgence last year, current indicators suggest that the German economy is set to face renewed challenges in 2012. Fortunately, as David Davies reports, these concerns do not appear to be impacting too severely on the country’s pro-AV distribution sector

The powerhouse of yore has lost its lustre. That, at least, is the suspicion as Germany contemplates a 2012 that is expected to be significantly more challenging that even the most sceptical of observers would have predicted six months ago.

The country has hardly been immune to the tribulations of the past few years, as GDP contraction of 5.1% in 2009 indicated (source: CIA World Factbook). The impression that year was that the great German boom was finally at an end, the country’s formidable industrial heartland no longer able to ensure its passage through any storm.

Economic reforms and substantial stimulus packages did serve to bring about a modest resurgence in 2011, with GDP growth of 2.7% suggesting that the country had successfully arrested the possibility of a serious decline. But in the latter half of last year, the tremendous problems confronting the eurozone – to whose survival Germany is absolutely fundamental – have seen the mist descend once again.

At the time of writing, the very real possibility that Greece might exit the euro is threatening to bring the crisis to a new pitch – and one that could even precipitate a continent-wide depression. Germany will be integral to any further rescue package, and the pressures that this will exert on its domestic economy are difficult to underestimate. The extent to which the country’s fortunes are connected to those of Europe as a whole have been readily acknowledged by economy minister Philipp Roesler, who recently admitted that “economic growth in Germany is only possible with sustained growth in Europe. That’s why we must make decisive and credible steps to overcome the euro crisis.”

Simultaneously, there are growing fears that the austerity measures directed from central government may now be inhibiting prospects of a domestic revival. The upshot of all this gloom is that few observers expect Germany to achieve growth of more than 1% in 2012 – hardly a ringing endorsement of its rulers’ current fiscal policy.

The fear of what may be around the corner was not entirely absent from the comments of our featured contributors, but in general the impression is that Germany’s pro-AV sector is remaining busy and upbeat. Strengthening distribution networks and maintaining a clear focus on the changing requirements of customers appear to have stood many in good stead. Similarly, recognising that there may be a need for more flexible credit and contractual terms seems to have played a role in keeping business moving.

“Despite the gloomy news in newspapers, we see that our industry is now as affected by the economic crisis as others are,” says Robert Hesse, vice president sales pro sound & intercom EMEA, Bosch Communications Systems, in a sentiment that is echoed by many others. “[At the same time] our market is not based on market influence, but instead on our excellent distribution network, our in-house R&D performance and our latest product launches.”
These upbeat sentiments are echoed by Klaus Schöpper (pictured), sales manager Germany in the commercial audio & installed sound department of dBTechnologies Deutschland, which serves as distributor for the RCF and dBTechnologies brands. “For our installed sound and commercial department as the German distributor of RCF and dBTechnologies, the business is still growing,” he says. “We expect some interesting projects to [come onstream] this year and are working [closely] with our customers, which [helps to] build more confidence in our work and products.”

Market indicators

In an impressive performance given the prevailing economic conditions, the vast majority of those who spoke to IE revealed that they had experienced an upturn in activity levels during 2011. Increments of more than 20% were by no means rare, with several companies alluding to truly formidable growth in excess of 40%. Existing customers retained their loyalty, while many companies also reported an encouraging number of fresh enquiries.
Commonly cited market drivers included new developments in audio technology, not least networking. Jürgen Scheuring from technology developer UMAN Universal Media Access Networks cites the impact of AVB (audio/video bridging) and networking adoption in general, while another contributor – who asked to remain anonymous – suggested that “networking is having a motivational effect on the entire audio landscape, with performance venues, in particular, keen to make sure that they keep up to speed with the latest developments”.

Other areas of audio are also strong, however, with Schöpper highlighting “DSP-controlled steerable speakers as one strong technology. [In addition there is demand for] audio/remote network options in larger installations, and [products to ensure compliance with] EN54.”

Hesse, meanwhile, alludes to the continued vibrancy of Bosch’s speaker business, as well as recent gains in market share across all of its other product groups (amplifiers, mixers, signal processors, microphones and intercom matrices). “Germany remains our strongest market,” says Hesse, pointing out that Bosch services dealers via its own sales organisation. “The German market is very demanding, hence we believe that our customers deserve to have direct contact with our own employees.”

Further strengthening Bosch’s customer responsiveness, Hesse alludes to the recent launch of the Straubing-based ASA (after-sales service) initiative. “Our pro sound and intercom brands benefit from this professional organisation, which is another example of Bosch investment in customer satisfaction,” he says.

dBTechnologies Deutschland is one of several other companies to indicate that they keep their service offering to customers under continual review, with recent developments including the engagement of a specialised service organisation. “We can offer many options [for] payment to our customers, ranging from different credit terms to leasing, so there is always a good solution for our customers and also for ourselves,” notes Schöpper. “In 2011 we decided to improve our service again and went along with an experienced special service company, a move that will help to solve any problems in a short time-frame.”

Green power

The general trend towards delivering products that help with energy conservation was among the other consistent themes of our contributors’ responses. Needless to say, this is a development that encompasses the full span of AV technology – from power amplifiers to the most elaborate installed lighting systems.

Schöpper is one of several observers to allude to the growing demand for green power and the burgeoning desire to reduce the power consumption of amplifiers and speakers, as well as the use of raw materials such as neodymium.

Sector trends

One of the recurring themes of recent market overviews has been the tendency of some manufacturers to address their distribution arrangements and, in some cases, to begin to go to the market directly. In the present climate of uncertainty, the desire of companies to review existing practices and ensure that they optimise the performance of their brands is quite understandable, but it is to be expected that some observers question the long-term wisdom of such changes.

Opinion garnered for this latest country focus suggests that Germany isn’t immune to these developments, with UMAN’s Scheuring noting that “the general trend seems to be that bigger manufacturers try to distribute directly”.

Whatever the precise motivation in each instance, there have certainly been plenty of changes in terms of individual manufacturers’ distribution arrangements of late. Audio suppliers, in particular, seem to have been exerting considerable effort in finessing their distribution policies. To select a mere trio of examples from recent months: Cloud Electronics appointed S.E.A. Vertrieb & Consulting GmbH as the exclusive distribution channel for the full range of Cloud audio mixers, zoners, multichannel amplifiers and audio distribution systems throughout Germany; loudspeaker giant Outline enlisted The Audio Specialists (TAS) to serve as its exclusive distribution partner for both Germany and Benelux; and Powersoft revealed details of a new partnership for the German market between Lauuser & Vohl – the amplifier brand’s distributor for the past few years – and TRIUS that will see the two companies collaborating on Powersoft support and sales.
As brands across the pro-AV spectrum seek to further consolidate their position in one of Europe’s most pivotal markets, it is to be expected that 2012 will bring forth further partnerships and fresh alignments.

Recent projects

Not surprisingly given the present conditions, bread-and-butter work – bars, restaurants, schools and the like – tends to dominate general discussion of recent projects. It stands to reason that landmark installs with national (and international) profile have been rather harder to come by, but in general the view on current activity levels is fairly upbeat.

“We were very fortunate to win a substantial amount of reference projects recently, including sports arenas, train stations, airports, clubs, hotels and TV stations,” says Bosch’s Hesse, adding that “each project where our products are installed makes us feel proud”.

Schöpper alludes to a multitude of applications for the extensive RCF product range, including evac and congress system deployments, meaning that “it’s not easy to pick out one special contract win!” Instead, he affirms that “we are successful and growing in every single market segment, and that, I think, is the most important thing – that we are on the right [path] and can offer a solution to our customers for every type of project.”

Looking ahead

Understandably given current events, few people are making especially bullish predictions about 2012. In general, though, most observers are expecting activity levels to remain strong. Encouraged by the phenomenal success of this year’s Integrated Systems Europe – which delivered a final registered attendance of 40,869, up a hugely impressive 17% on 2011 – most are also keenly anticipating the next significant stop on the annual trade show calendar: Prolight + Sound, which takes place at Messe Frankfurt from 21 to 24 March.
As that show will doubtless further exemplify, a steady flow of highly creative and cost-sensitive solutions is doing much to keep pro-AV healthy in what is undoubtedly the most challenging economic phase for many decades. This focus on innovation may prove to be especially beneficial over the coming months as the eurozone could experience the greatest challenges of the latest crisis period. The impact on Germany of such an outcome is hard to predict, although in the short-term it is very unlikely to be positive. But while the country is going to experience more turbulence as it tries to negotiate renewed stability for itself and the eurozone, its AV sector appears almost certain to remain a beacon of activity and dynamism for the entire European region. IE