Articles and whitepapers

Guest Commentary: Don't Panic! (3/2/2008)

By Glenn McClelland, Armour Home

I write this on a morning when stock markets around the world are crashing, the 'reporting period' of high street Christmas trading reveals worse than expected figures, and on my radio doom and gloom merchants talk about financial meltdown - anyone would think UK Plc is about to go bust!

Armour has a different view of today's market and which strategies are needed to progress and prosper under these conditions. We don't deny the economy is entering an 'interesting time' but if you are in a vehicle that's going fast and suddenly you see you're heading for a brick wall, you have two choices, either you slam on the brakes, shut your eyes and brace for the impact, or you change gear and steer round it.

Armour's policy is to go around problems we are unable to influence, find new routes and then accelerate away. We see opportunities even in a sluggish market place - and in any event with our dynamic team we are not easily knocked off balance.

How can we be so optimistic at a time like this? The answer is because we have systematically structured the company specifically to reduce our vulnerability to what the late UK Prime Minister, Harold Macmillan called 'Events'. I'm not claiming that Armour is immune to such things, that would be frankly stupid, but I am saying we have achieved a situation where we can expend most of our energy being proactive and not wasting our time merely reacting to external pressures. What we do is not necessarily the best route for everyone, but it is certainly working for us, and what I am certain about, is that doing nothing is not an option.

What is our strategy?

Firstly, we've placed our eggs in a large number of baskets. Currently we have a wide and diverse portfolio of more than 1500 outstanding products, some 70% of which are manufactured by Armour. Our 'own brand' products are capable of being sold into more than 200 countries worldwide (although we currently sell to just over 50), so forget the normal parochial approach adopted by a lot UK companies - we're out there pounding foreign high streets, selling British-designed products to customers who appreciate British 'know how'. Indeed Armour now has resident representatives looking after distributors in Northern Europe, Eastern Europe, Southern Europe, the Middle East and the Americas.

We also have a long-term policy of selling both 'ice cream and umbrellas', by which I mean products whose sales peak in the summer and others that peak in the winter. The latter tend to be the more traditional hi-fi-type products, whilst the former mainly consist of custom installation products. Having said that, custom install has grown to the point where it actually sells well throughout the year.

Beyond that, we've also tried to balance the portfolio with products that sell well when the economy is booming, such as hi-fi and home cinema separates, and other ranges that will come to the forefront in a difficult outlook. The prime example of this is Systemline Modular, our multiroom entertainment system specifically aimed at the new-build market. This product range has increased sales significantly over the last few years but, perhaps surprisingly, a depressed housing market means even greater sales as property developers become anxious about selling houses quickly. Put simply, the tighter the market, the more developers feel the need to enhance their properties to make the sale, and there's no better enhancement than a nice new multiroom system.

Maintaining margins

No one will be surprised to learn that we're trying to avoid lower prices, because that route means a long slow march towards commoditisation and minimal profits. We are taking a much longer-term view of our market place and investing heavily in technology, people and new products. We have many products on the drawing board, of which nearly 20 are due to be launched before the end of May 2008.

We expect to lead the way with aspirational products that deliver a high margin for our customer, but we don't expect to achieve this goal by ourselves - our 22-strong R&D department is supported by 15 technology partnerships.

Higher-margin products need training - at Armour we are now offering more training to even larger numbers of dealers (1200 last year), and we intend to duplicate our facilities in Manchester in the Spring of this year. This all adds up to opportunities to sell more products to more people.

Plan for change

Of course, not everything we do applies to all businesses within our industry, but if you read this and conclude that nothing is relevant to your company, I beg you to reconsider. To succeed, we all need a strong and vibrant industry, and we all know that is not going to happen by itself. Merely not being frightened of change isn't good enough. Frankly, even 'welcoming change' won't get us very far. In my opinion, we all need to proactively plan for change, whilst at the same time, grasping the opportunities that occur - like helping Systemline Certified Installers sell Modular systems into the new-build market!

Glenn McClelland has been the Managing Director at Armour Home for five years and has guided the company's change and rapid growth throughout this period. With a background in sales and marketing, he is a graduate with an MBA and previously held director level posts in the oil industry.

www.armourhe.co.uk