David Burlew joined Adeal Pty Ltd as Chief Operating Officer mid-way through 2013. This was his first role in the photographic industry following executive and board level roles with a range of multinational businesses, predominantly across the retail, distribution, industrial and manufacturing sectors. Nissan, Goodyear and Pacific Dunlop are among his former employers.
When Adeal’s sole shareholder, Sieglind D’Arcy stepped down from the CEO’s role in October 2013, Mr Burlew assumed the title. The transition was so smooth that it went largely unremarked at the time in the close-knit photo retailing community. We asked Mr Burlew about his impressions of the industry, its prospects for the future, and Adeal’s part in it:
PC: You joined Adeal and the photographic industry midway through last year. What’s your assessment of this industry from a business and cultural point of view?
David Burlew: After some 18 months in the industry, my observations are of a dynamic business model. Fundamentally mature, but peppered with quantum and frequent changes in product innovation, customer and distribution alliances, and somewhat fickle product life cycles. Having said all that, you could easily describe a variety of sales distribution business models operating Australian in 2014 in the same manner.
PC: What changes have you and your team implemented at Adeal over the past 12 months or so?
DB: I guess the major change is the retirement of our owner, Sieglind Darcy. After 25 years in the company, she has now taken time to pursue some other interests. We have recruited some specialists to help us build on the core strengths of the company. We have in some respects corporatised the company somewhat, but without losing the heart of how we do business. Adeal has, for nearly four decades built strong, partnering relationships with its customers and suppliers. Some things we don’t want to change.
PC: So how is business?
DB: Data suggests that the industry is down some 20 percent from last year. We have focussed on growing share. A bigger piece of a smaller pie if you will. But out of soft periods such as these comes opportunity. We have been fortunate in that our customer base sees us as a trusted partner. Someone on whom they can depend.
PC: Can we expect any major new product lines from Adeal, or perhaps new agencies lined up?
DB: We have been busy in the acquisition of several new brands and products. Particularly in categories that we do not currently represent. These will be announced in due course.
PC: The photo retailing business has been tough – what’s your take on 2015?
DB: I think that the macro-economic conditions that influenced 2014 performance will remain in 2015. My assessment is that this is new norm. Our currency will settle at low to mid-0.80 cents to the US dollar, unemployment will remain stubbornly high and other sectors outside photographic will compete for the same disposable-income dollar that our industry seeks from the consumer. If this is indeed the scenario for 2015, then more consideration to profitable volume and improved working capital metrics will be the cry for all who operate within the industry.
PC: What do you see as, say, the three main issues confronting photo retailing?
DB: The three main issues?? I could give you 33! Currency volatility will be an issue as it filters through to the end user. We have enjoyed a strong dollar for a long time. I think those days are over.
Smartphone vs Camera. Whilst there is a growing (reluctant) acceptance that smartphones are now part of the photographic landscape, their product life cycle is measured in months as opposed to the traditional hardware. This has obsolescence and working capital implications.
Retail vs Etail. More on that in the next answer…
PC: Adeal has a trade-only website and has resisted online sales – do you intend to continue with this policy?
DB: Adeal has preserved its status as a ‘non-combatant’ in the retail battle. I think we have been able to take great comfort when we tell our customers that we do not compete with them. I think most, if not all of our competitors have some kind of retail offering. Some overtly and some covertly. But the demarcation between wholesaler and retailer is now so blurred, that our traditional channels of distribution look more like peak hour in Mumbai.
We now find that a growing number of our customers now compete with us as they transition into their own wholesale distribution model. This leaves us with little option but to compete head to head with their wholesale offering and no doubt drive margins through the floor, or to establish our own on-line model.
I am undecided.