A year of change
A look back at 2016— and a clear roadmap for 2017.
2016 was a very unusual year. Our autonomous growth rate didn’t reflect the progress we achieved in developing product families and value-added solutions. It didn’t reflect the increase in e-business, either. And it didn’t reflect all the effort put in by our people. So our autonomous growth was sluggish in the past year. But developments at the end of the year point to a recovery in 2017 that will give our associates greater opportunity to show their professionalism.
We were certainly off to a difficult start in early 2016, though we had a good fourth quarter that brought autonomous growth for the full year to 0.4%. But autonomous growth was negatively impacted by a decline in copper prices and the weakness of specific currencies, as in Mexico, Canada, the United Kingdom and China. On the other hand, the many acquisitions we made in 2014 and 2015 boosted our growth.
The handful of country organizations that had a tough year in 2016 are well on the way to improvement and should be close to achieving the performance level we aim for in 2017.
In Europe, we posted mildly positive results, driven by Northern European countries like Finland, the Netherlands and Belgium, as well as by Italy and Spain further south. In North America, growth was flat in the United States and Canada, where industrial activity lacked momentum, due in part to low oil prices. Our business in Brazil held up despite difficult conditions, but for the first time, our sales in China showed no growth. In Australia, we ended the year with mildly positive growth. Our global sales in 2016 reached €20.6, up roughly €350 million over 2015.Sales
We fared somewhat better than our competitors did, particularly in our electrical products business. Our e-business sales showed higher growth, driven by the development of our webshops and mobile applications.
2016 was also a year devoted to consolidating our previous acquisitions. It was time to take a break in our external growth drive, so we limited ourselves to five buyouts during the year. They all show continuity with the ones we made in previous years, in that the primary goals were to achieve synergy, operational excellence and a good return on investment. We can continue in 2017 with our selective acquisition policy. We also succeeded in reducing our debt load.
We invested further in in-house talent, with new training programs, an e-learning module and more systematic “talent review.” We also took steps to raise staff awareness of the increasing importance of legal and regulatory compliance, an issue with which we were already engaged. In 2016, we moved to a higher level, initiating a large-scale training program. Sooner or later, compliance regulations will affect all our country organizations and businesses, so we need to be prepared.
This is a Group-wide program carried out with head office support and local involvement.
In the complicated environment of this past year, we also had to deal with a problem specific to our Group: the departure of our Chief Executive Officer. A three-person interim executive body was quite naturally put in place. In addition to my role as Chairman, I became the acting CEO with assistance from François Poncet and Frank Lakerveld. For over eight years, Frank had held senior executive positions in our Group, serving as Board member and more recently as the head of the Board’s Strategy Committee. Our management triumvirate has drawn on the Group’s underlying strengths, including the quality of its management teams and local operating companies and the unwavering commitment of its people.Simplified balance sheet
Our goal in 2017 is to resume our drive for higher profit margins while boosting our market share with the basic idea of maintaining or strengthening the number-one or number-two positions we hold in a variety of countries.
Because we serve rapidly changing markets, we have to rethink the way we operate and our people need to adapt. We will all confront the strategic challenges of tomorrow together. More than ever, we aim to make life easier for customers. We are aware of the efforts we are demanding of our people, but we have confidence in their ability to meet the challenges facing our Group. We know that we will make it as long as we stand together.
Sonepar Mexico : Urcesino Palacios Barro
Cable Solutions : Lawrence Tam
Worldwide initiatives to serve our customers
To make life easier for customers and meet their requests, Sonepar makes use of trade shows, digital applications, databases, optimized branches and customer satisfaction surveys. Here is a brief overview.
Our operating companies take a broad range of initiatives to boost contact between the Group’s customers, staff and suppliers. The aim is for customers to be able to select and order products more knowledgeably and for Sonepar to gain greater understanding of the changing needs of its highly varied customers.
Such direct contact gives us the opportunity to listen carefully to them, learn about their needs and interact with them. In addition, the Group exhibits at electrical industry and more narrowly focused trade shows— always with a highly active approach. At the three-day industrial automation show held in May 2016, for example, over 200 customers visited Sonepar Italia’s 160 square-meter area, many of them establishing contact. On the other side of the world, in Australia, ALH played an active role at the Gladstone Tradeshow alongside 38 suppliers, displaying expertise to more than 400 customers and showcasing the latest electrical product innovations.
Organizing our own shows
In the Czech Republic, Mexico, Germany, Norway, Panama and elsewhere, we organize our own shows and events in partnership with our suppliers. In April 2016, Lumen held its ninth Lumen Exhibition in Montreal, Canada, bringing together 175 suppliers over a two-day period.
- 50+ shows for customers in 2016
- 114 supplier booths
Sonepar France similarly put on its eighth SIDEC show, first in April in Lyon, and subsequently in November in Marseille, structured around three markets (residential, service and industrial). The 114 supplier booths drew more than 4,100 visitors. In Hungary in September, Sonepar held its tenth major event, one with unmatched scope in the Hungarian market. Over 1,550 electricity professionals took the opportunity to meet up and find out about the latest developments in the industry. In Latvia, SLO successfully staged its fifteenth Winter Day show.
Group operating companies are also increasingly inventive when it comes to devising unconventional events that can strengthen customer relationships. Sonepar Germany has a truck that drives around with the Sonepar Innovation Lab on board, and Technische Unie even operates a floating show that travels the Dutch canal system in the autumn.
Technische Unie exhibition boat in the Netherlands
This boat traveled the Dutch canals for six weeks, anchoring in a total of twenty-two towns and cities. 75 suppliers of over 125 brands joined Technische Unie in this unusual project, which presented innovative solutions to three market needs: smart homes, smart buildings and smart workplaces. More than 5,200 customers “visited” this stunning exhibition boat. Technische Unie subsequently sent out a questionnaire so that visiting customers, suppliers and associates could rate this original experiment. The outcome? Extremely positive feedback on an event that brought people together and introduced them to the latest innovations in the marketplace.
Online solutions that save time
If customers don’t come to us, we connect up to them. To meet their needs, Group companies runs webshops, and have more recently introduced applications for tablets and smartphones to facilitate the product search and order process. There were many new, redesigned or improved programs in 2016, all of them with a similar purpose: get people to use digital tools more easily, with greater confidence, anywhere and any time.
In the United Kingdom, Routeco overhauled its e-commerce platform with enhanced features and a larger number of products on offer. Sonepar Italia likewise extended its digital platform and launched a new website. And for the third year in a row, Gescan won the Click & Order E-Commerce Leadership award given out by the Electro-Federation Canada (EFC). Meanwhile in Colombia, Melexa started up a new customer web portal, recast its website and established a clear presence on social networks. Sonepar companies in the United States developed a mobile solution for scanning products, with all necessary information instantly available.
In Mexico, Vallen Proveedora connected its e-commerce platform to a partner firm’s integrated supply center. These examples bear witness to the Group’s responsiveness. There are also mobile apps like Advantage Mobile, rolled out by Corys in New Zealand this past October. A total of nine Group country organizations now use the same software platform. The plus point common to all these improvements is that they are quick and easy for users.
The Sonepar Innovation Lab in Germany
The plan to create “an intuitive digital adventure” on board a truck became a reality in early 2016—and a successful one, too, that attracted over 5,000 Group associates, suppliers and customers as visitors. The truck rode all over Germany, making a total of thirty-three stops. The purpose of this “lab” was to showcase innovations and highlight Sonepar’s ability to anticipate upcoming developments in manufacturing and electricity, to whet people’s appetites and build stronger ties to customers. Its multimedia content focuses on the latest technology trends, from smart homes to e-mobility and from interconnected systems to digitization of the economy. In 2017, the project will be moving to the next level, centered on smart homes and Industry 4.0 driven by the latest in technology. So there’s a good chance that Group customers will soon be entering an extraordinary world of “digital and emotional experience!”
A constantly enhanced branch network
Sonepar’s digital applications and extensive branch networks are obviously complementary in nature. For that reason, we have continued to increase or geographical coverage and improve customer service at branches, while updating and revamping branch merchandising (e.g., customer flow and signage at branches, the number and classification of items, news and information, integrated showrooms). Sonepar Austria replaced its former branch in Salzburg with one in a new, larger, more modern building. In Canada, Lumen opened two additional branches last year to provide better local service. Hagemeyer China chose Beijing Road in Shanghai as the location for a new branch that features an extremely wide range of products and suppliers. In France, the renovation–upgrade program continued, with 200 branches now entirely redesigned. In Italy, Sonepar opened three new branches that are more conveniently located, more up to date and more spacious. And finally, in Malaysia, KVC converted a full-service branch into an outlet dedicated to industrial customers.
Tools for zeroing in on customer expectations
The Group also uses tools for analyzing customer needs and trends to be able to meet those needs more effectively. To start with, we have continued to add new features to Watson, our favorite “detective”—the online survey tool developed several years ago by Sonepar International Services (SIS). Watson enables operating companies to carry out customer satisfaction, brand perception and similar surveys. There are also internal polls to assess distribution policies and the product offers of specific suppliers. The goal is to identify strengths and weaknesses so that corrective action can be introduced to enhance service. In addition, we conduct surveys of narrower user groups in order to help develop new services and test out novel approaches.
Lastly, more and more Group subsidiaries take advantage of the latest technology to deploy a broad spectrum of Customer Relationship Management (CRM) tools, including data collection and analysis software and customer support, marketing and loyalty programs. This makes it easier to fine-tune the responses to customer expectations in ways that due justice to their diversity, specific needs and constraints. Witjoint in China has already followed that path, as have Sonepar entities in Belgium, Italy, the Dominican Republic, Germany and Spain. And Sonepar France has already given staff members in several regions CRM training with a mobile phone interface to facilitate usage and adoption. In every case, customer satisfaction is the ultimate goal.
Working together to add more value
With its fifth annual international suppliers event, Sonepar has once again highlighted the importance of partnership for innovating, building to last and responding better and better to customer expectations.
In holding a fifth annual event for our international suppliers last year in Madrid, we were in fact working for our customers. To provide the right responses to customer requests, adapt to their changing needs and offer them leading-edge innovations, we leverage the preferred relationships we have built up over the years—our relationships with Group suppliers.
We do so on the basis of well-defined principles: making customers the abiding focus of our work, constantly aiming for operational excellence and exploiting the advantages of digital technology. That business model enables us, together with our partners, to generate added value in ways that are fine-tuned to each market, each Sonepar business line and the overall nature of our industry. But such a win-win approach comes naturally to a company that aims to be La Référence.
Databases to boost efficiency
Under the banner “Find your product,” one booth gave visitors a chance to find out “live” how you search for a product in a digital catalog. Suppliers actually got to hunt down their products in a Sonepar database using a computer, tablet or smartphone, thanks to a tried-and-tested system deployed by the Group in twenty-two countries called Sonepar Product Information Management Solutions. This makes it easier, for example, to share data (e.g., product features, classifications, photos), produce paper and electronic catalogs and enrich our webshops.
The Madrid event gave Sonepar executives and manufacturers the opportunity to align their vision and goals. The crucial role of equipment distribution in the value chain was discussed, while the issues surrounding digital transformation of our industry and the behavior of customers and end users were highlighted. Further themes included the importance of producing detailed product information and the vital need to provide our staff with additional, regular training. Last but not least, speakers emphasized the Group’s decentralized business model, driven by the commitment of our people and by the strong values they share.
- 12 interactive booths
- 3 banners
Twelve interactive booths arranged under three banners (“We are digital,” “We build operational excellence” and “We are customer-centric”) provided concrete examples of Sonepar achievements, typically through immersion experiences, many of them digital, in real-world situations. This enabled us to showcase Sonepar’s mastery of cutting-edge technology. There were video walls displaying key figures and explaining the job profiles of our associates; tablets and smartphones used to replicate the customer experience at our branches or elsewhere; virtual immersion in a variety of customer environments, including the solutions proposed; virtual reality headsets offering visits to distribution centers; augmented reality and more.
Virtual immersion at a distribution center
Under a banner proclaiming “A galaxy of solutions,” a booth showed the wide variety of logistics solutions used to address the special needs of local customers most effectively. After putting on a virtual reality headset, each supplier had the leisure of “strolling” down the aisles of a Sonepar “center of excellence” and discovering the complexity of Group logistics. Many attendees came away duly impressed with this 360° experience
Tailored customer solutions
Under the “Tailored service” banner, a third booth gave a virtual presentation of three customers—an electrician, a manufacturer and a consumer—that summed up their constraints and expectations. This was followed by three short videos explaining the specific targeted services crafted by Sonepar subsidiaries, and finally by a discussion of possible new services to be jointly developed.