Trade-only computer hardware and software distributor Spire Technology is at a pivotal point in its development. Managing director John Appleton gives Tim Wickham the low-down.
There comes a time in the life of most growing businesses when it feels like they are bursting at the seams. Verwood-based Spire Technology is currently feeling that somewhat squeezed sensation – literally.
“The way the company is developing will require some big changes,” said managing director John Appleton. “Our main challenge is a lack of warehouse space. Our team works fantastically, but at times getting stock in and out is a bit like playing a game of Tetris.”
Having been based on the same industrial estate for all its 29 years, where it has moved to ever larger premises, Spire has now outgrown its 26,000 sq ft building.
The high cost of warehousing in the Solent region isn’t making the decision to move very easy. Appleton has considered a presence in the Midlands – “the centre of the logistics web” – but is mindful of the impact on Spire’s loyal workforce.
The company currently has no gearing, but might consider outside investment to fund future expansion. “We aim to decide on a move in the next six months,” said Appleton. “Our 54 staff could handle double the amount of stock, so the opportunity is huge.”
Appleton describes Spire’s challenge as exciting, rather than daunting. “We’re ready for our next move,” he said.
Spire was established in 1990 by finance director Geoffrey Fidler and chairman Victor Unt. Having previously worked with the pair, Appleton joined them a few months after they started Spire. The trio co-own the business.
The company increased annual turnover from £42.8 million in 2017 to £54.5m in 2018.
“Last financial year, the boom in Cryptocurrency mining brought additional sales, as did our continued growth in the gaming market, plus the usual price hikes following microchip shortages,” said Appleton.
Spire began life as a UK distributor of Atari’s pioneering computers and realised there was money to be made building its own ‘clone’ PCs. The clone PC market expanded very quickly and did very well until the big brand PC players squeezed the market by lowering their prices.
Early on, Spire decided it would never be a ‘broadline’ distribution company that sells everything and anything computer related. “We are specialists in the PC components space,” emphasised Appleton.
Spire also aims to set itself apart from competitors through long lasting relationships with customers and a high staff retention rate. “Customers rely on us and know they will be dealing with the same person each time they call us.” he said.
For major suppliers, like Taiwan-based ASUSTeK, the world’s leading PC mainboard manufacturer, Spire’s flexibility is another advantage. “For example, if a manufacturer implements a price drop or a sales promotion, we can move quickly; we can get stock in and out to customers fast. Big players aren’t always as agile as we are,” said Appleton.
Stock levels are closely managed. Minimising the costs associated with holding stock is difficult because not all fluctuations in demand can be predicted but when they can be, Spire’s close vendor and customer relationships puts them in a strong position to manage everyone’s expectations.
Spire completes a full stock take of each and every product at the start of each working day to keep tight control over more than 2,000 product lines.
“Discrepancies with stock are quickly identified and resolved, which is important because our stock holding is significant and our stock turns over quickly. Without daily stock checks any mistakes could be extremely costly. We’ve never had a problem with shrinkage,” noted Appleton.
With about 60% of its products sourced from overseas, currency fluctuations are a constant challenge for Appleton and his team. “Although currency gains and losses more or less balance over the year, the changing value of sterling impacts us every day. We place a lot of orders and mitigating the effects of currency changes is an integral part of our stock management.
Appleton sees continuing opportunities in the gaming sector, where demand for motherboards and graphics cards is huge. “We need to be continually on top of our game and proactive in our vendor relationships,” he said. “We win more business because we specialise; our suppliers and our customers know they can rely on us.”
When Spire finds the additional warehouse space it needs Appleton will be able to take on more vendors and look more broadly at what products the company stocks.
“At the moment, our growth has placed physical constraints on the business which means we have to be extremely particular when signing new partners,” said Appleton. “But the future is exciting. We have a great opportunity at Spire to keep growing in a niche that works for us and suits our business model.”
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