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Systemax shifts away from retail to focus on B2B markets

March 16, 2015 03:37 PM
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The B2B writing is on the financial walls of Systemax Inc., where online business-to-business sales are rising sharply amid steady declines in retail sales.

The company, which owns and operates TigerDirect, Global Industrial and other branded organizations that sell information technology and industrial products, will exit nearly all of its retail stores, which operate under the TigerDirect brand, by the end of June, and take other steps to “align our resources solely with a B2B focus,” chairman and CEO Richard Leeds said last week while announcing the company’s financial results for the fourth quarter and fiscal year ended Dec. 31.

The company will continue to sell to consumers online, however, and has no plans to abandon its U.S.-based TigerDirect.com or related retail e-commerce sites in Canada and Puerto Rico, executives said in a conference call last week with stock analysts, according to a transcript from Seeking Alpha. With TigerDirect.com, Systemax is the 29th largest North American online retailer according to the Internet Retailer 2015 Top 500 Guide, which ranks companies on their annual web sales. Several years ago, Systemax acquired the assets of multichannel retail chains CompUSA and Circuit City, folding them into its TigerDirect operations.

But the main focus on growth is on B2B sales, as Systemax expects recent trends to continue.

"Fourth quarter performance was similar to the trends we have witnessed throughout 2014, with all of our B2B channels delivering revenue growth, while our retail business struggled,” Leeds says. “Our results highlight the focus we have placed on our B2B channels during the past several years and the opportunities we see in this business.”

The company’s worldwide B2B sales increased 7.0% year-over-year to $652.5 million for the fourth quarter, up from $609.6 million; and 9.0% for the full year, to $2.55 billion from $2.34 billion. In contrast, retail sales fell 1.6% for the quarter to $260.4 million from $264.6 million, and 11.7% for the year to $891.0 million from$1.009 billion. Systemax doesn’t break out online and offline sales, which include sales processed through field sales reps and customer contact centers.

Most notable in the company’s move away from retail will be its closure in the first half of this year of 31 of its 34 physical stores operated under the TigerDirect brand in the United States, Puerto Rico and Canada. The three stores that will remain open, the company says, are in locations where they can support strong B2B markets: in the company’s Flagway Miami facility, which is near its North American technology headquarters; in Puerto Rico, where it is near “significant B2B operations,” and in a technology products distribution center that the company didn’t identify.

TigerDirect operates as part of the Systemax North American Technology Group, which covers sales of computers and other technology products to businesses through biz.TigerDirect.com, GlobalComputer.com, GlobalGovEd.com and InfotelUSA.com; and to consumers through TigerDirect.com, TigerDirect.ca in Canada, and TigerDirect.pr in Puerto Rico.

Systemax also operates in two other market segments with its Industrial Products Group and its EMEA Technology Group.

The Industrial Products Group, operating under the Global Industrial brand, sells more than 1 million industrial, material handling, office furniture and other business products through GlobalIndustrial.com, direct mail, field sales reps and customer contact center. Systemax upgraded GlobalIndustrial.com last year, helping to continue its double-digit growth rate of recent years, Global Industrial president Bob Dooley says. 

The EMEA Technology Group, which includes the Misco and inmac wstore, brands, sells information technology products through e-commerce and sales reps to businesses in Europe, where the company says it currently operates in Austria, Belgium, France, Germany, Ireland, Italy, Netherlands, Spain, Sweden, Switzerland and the United Kingdom.

Sign up for a free subscription to B2BecNews, a weekly newsletter that covers technology and business trends in the growing B2B e-commerce industry. B2BecNews is published by Vertical Web Media LLC, which also publishes the monthly trade magazine Internet Retailer. Follow B2BecNews editor Paul Demery on Twitter @pdemery.

 

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