RetailVision Europe: Retailers Are Bullish On 2008 Outlook

Despite a somewhat gloomy economic backdrop, retail executives at Retail Vision Europe 2008 are optimistic that this year will bring healthy sales gains.

Office products giant Staples is coming off its best year ever in Europe in 2007 and 2008 is also looking "great," said Marcello Castiglione, European director of technology products for Staples.

"We run different concepts in different countries and they are getting more and more mature," said Catiglione. "We are really getting ready for a big next half in Europe and becoming bigger and bigger in Europe."

Castiglione also referred to Staples plans to expand its business by taking over rival Corporate Express NV. The Dutch based Corporate Express on Wednesday rejected an increased 10 percent bid by Staples. The Staples bid, which was summarily rejected by Corporate Express, now values the company at $2.27 billion. Staples now plans to take its case directly to Corporate Express shareholders.

"It's not a public secret that we are now trying to buy one of our competitors," Castiglione said. "I think it will be a great move for both companies, for their shareholders, for our shareholders and also of course for our customers."

"We see things very sunny," he said. "The outlook for us is very good. But we have a little different mix of products." He said Staples customers are coming to the store month to month to buy their office supplies and backs it up with technology products that are sometimes under margin pressure. "Everybody needs supplies," he said.

Castiglione was one of several hundred retailers gathered for the three-day retail conference this week in Rome which brings together leading retailers with hot technology product providers. Retail Vision is owned by ChannelWeb parent Everything Channel, a division of United Business Media.

Nick Graves, senior manager, third party products, Europe for Apple UK Limited, said he is optimistic about 2008. "We're pretty bullish," he said. "We're pretty bullish from a European point of view and from a global perspective. From our point of view we have a strong a proposition as we have ever had. Any derailment is likely to come from outside."

Graves said Apple's multichannel strategy is one of the keys to the company's success supporting both its own retail stores and VARs. "In the IT business there was always a fairly black and white view: you either went direct like Dell or indirect like HP. There wasn't much in between."

"Apple bringing out a multidimensional channel model and making it work was quite novel for the industry," he said. "The reseller channel in the UK has never been stronger." There is also strong growth in Europe around Apple printer VARs who are taking some of the ideas from the Apple retail stores and taking it into new markets.

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Jon Atherton, group vice president of commercial for Entatech, a major distributor of IT products based in the United Kingdom, said the key to continuing strong sales growth is providing new services for retailers "not just products to help drive their business forward." For example, he pointed to Entatech's Entamedia group which was spun out to help retail customers design and update their web sites. "From a fundamental point of view it's all about profit," he said. "Where do we see the profit next year and the year after. That's how the company has grown to what it is today: to focus on and drive and invest in new areas which is going to make all of us money. That's why most of us come to work. And if you're not making money there is no point in doing it."

Tribeka Ltd., a London software maker which provides retailers with software that automates the electronic distribution of software and DVD content, is also expecting good things in 2008. Mark Furtado, head of DRM for Tribeka, said he sees an exploding on demand DVD market that will power the company in the future. "We feel very good," he said. "The whole on demand market is growing.For us it's looking very good. It's just a matter of us making it available to retailers."

The upbeat market forecast from retailers and distributors was echoed by a keynote kickoff speech titled "Weathering or Riding 2008? The Consumer Landscape As Is" by Pascal Bollon, global marketing director for IT and Office for global market research firm GfK R&T.

Bollon said the current doomsday headlines in Europe echo fears from several years ago that never materialized. "Everybody seems to be fearing the storm coming up," he said.

Bollon, however, said those fears are unfounded. He rolled out a dizzying array of data to "put to rest the gloom and doom" scenario feared by some retail channel executives. Gtk, in fact, predicts that the worldwide electronics market will be up a healthy 8 percent to $679 billion this year. "The market is still extremely dynamic," he said. "The market is there. The demand is there. The pickup is there with consumers in the stores and online."

Bollon said vendors need to specifically focus on the benefits of technology products rather than price points. "Nobody talks anymore about the price points of microwave ovens," he said.