The Italian security market is very fragmented, so it makes the distribution channel very complex. It is usually very hard for a single international or national distributor to fully penetrate all the regions in Italy.
The Italian security market is very fragmented, so it makes the distribution channel very complex. It is usually very hard for a single international or national distributor to fully penetrate all the regions in Italy.
Andrea Hruby, CEO of HESA said, “I think the reason can be traced back to historical reasons, when in the Middle Ages. Italy was originally not a single country, but separated by multiple states and regions. And, there are still many cultural difference among those areas. It tells why the country has plenty of smaller distributors, with very few national distributors. HESA is one of the leading national distributors.”
Hruby further explained, “That is also why we created another company DIAS in 1991, to address this problem in the distribution market. DIAS only sells products to sub-distributors, in all the distribution channels in Italy, with different brands from HESA to avoid customers’ confusion. In this way, we are able to provide the protection to each distributor. In Italy, it is very important to do this way in order not to interfere each other."
"For bigger projects, we always follow them by HESA. With this strategy, we are able to approach all different levels of the market. Then, both companies are able to grow substantially this year.”
Because of this unique feature, the distributor’s role is quite important in Italy, which drives the actual business and builds up all the local relationships with customers.
Major national distributors, with multiple brands, usually target major systems integrators for the project market. Because project requirements are higher — with large-scale installations and complex system design, companies usually carry strong IT/IP background and technology. On the other hand, those targeting sub-distributors tend to choose a single brand to protect their own market territory.
Value-added distributors boost solution market
In the past five to 10 years, there has also been an influx of “new” distributors from the IT, network, and communication fields entering the security market that are also providing solutions for Italian systems integrators. Their participation has made the top-end project market extra competitive. This market sector is also covered by many world-famous leading security brands. The brands often mentioned by distributors with unique technologies are FLIR Systems, Avigilon, and Optex, which offer thermal imaging sensors, advanced video analytics, and sensing technologies, respectively.
Some companies also pointed out video networking products. “Even though Chinese video networking products are growing very fast; however, they are not yet reliable. If they are used in a small-scaled system, it is fine. But, if they are used in a large and enterprise system, it is easy to see the problem. That is why we work with Comnet, the US company,” said Aldo Punzo, Product Marketing Manger at Bettini Video & Security Technology. For most of these type of distributors, they often provide multiple brands, covering from video surveillance, intrusion/fire alarm, and some access control.
Invasion of Chinese products
Most of the simple installation projects, often, referring to the commodity market, is controlled by sub-distributors in different regions. The business is also very price sensitive and now are mostly dominated by the two leading Chinese brands, Hikvision Digital Technology and Dahua Technology. The products from these two companies cover quite comprehensively in the Italian distribution market, with or without their own brands.
VideoTrend is the official Dahua distributor in Italy, and has a fully-owned subsidiary in Spain. Videotrend sells Dahua as well as other complementary own-brand equipment in Italy and in other South European countries, where Dahua is not present. “In Italy, we sell Dahua products indirectly, exclusively to major national distributors. Our partnership with Dahua started four years ago. Before, we imported other Korean and Chinese brands. However, in these years of cooperation, we experienced that Dahua has reached excellent product quality, and frequently update their technology and their product offering, which can ensure the satisfaction of our customers in this quickly changing and demanding business segment,” said Alberto Valle, European Sales Manager of VideoTrend.
However, one leading distributor in Italy said, “There are some Chinese companies trying to approach us. However, their products have been fully covered in Italy. I don’t think we can add any extra values and they also have their local company here. I don’t think we can compete with them since they carry a very high volume. That is why we focus on the high-end market.”
Some leading national distributors focused on sales to sub-distributors then switched to other Chinese products to compete in the market. Eurogroup is an example. Eurogroup and Sunell’s distribution partnership started in October 2015. Alessandro Farina, Sales Marketing Manager of Eurogroup said, “In the past, Eurogroup was the major distributor for Samsung Techwin. However, Samsung has many distributors in this region, which causes a lot of competition. Some major distributors represent multiple brands, but they usually don’t have a certain brand for exclusive distribution in Italy. So, for their sub-distributors, it is hard to protect their own customers. That is why we would like to choose an exclusive and unique brand to promote to our customers. Since Eurogroup has been working with Sunell for over 10 years, so now Eurogroup and Sunnell decided to start this important partnership. With this exclusive distribution, Eurogroup can give its own sub-distributors good protection.”
“Sunell has already offered a complete video surveillance solution to Eurogroup’s customers. Eurogroup doesn’t have to worry about compatibility and integration with other sources. Eurogroup also has the technicians to provide the right solutions and services for our customers,” said Paolo Giuseppe Cardillo, CEO of Eurogroup. The market competition over price exists in different products, as all over the world, in every market. To respond to the competition from Chinese brands, “many world famous brands, last year, also released second level (more cost effective) solutions. So, they are able to compete with Chinese brands, but with a recognizable high quality given by the brand name and the high R&D assets they can count on,” said Alessandro Bua, Marketing Manager of Compass Distribution.
Final Words
The Italian market is very fragmented with complex sales channels. Distributors need to be very skillful in blending different brands and turning them into useful solutions for systems integrators.