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VM interview: Jonathan Berlin of Universal Display on challenges to the sector

Q: What’s your sense of the VM space right now?

A: "The demise of BHS and Austin Reed is worrying and pointing to going back to the dark days of the 2008/9 recession. I’m not sure if there’s been some collective heads in the sand, but the emerging markets are also suffering. Places like China and Brazil are not the fat gooses people thought they would be. Lots of retailers are battening down the hatches."

Q: What could the impact of this be?

A: "I think we’re riding it out well, because we have larger clients and are producing new ranges, but the general consolidation of the high street into a few large super stores means business will be hard-fought. Typically, if we do a roll-out of 500 stores, by the time we get to the 400th store, the first tranche of shops are asking for a refresh, but we are seeing some retailers looking to have display mannequins and other collateral last four, five or even six years."

Q: Are clients eating your margins?

A: "Not yet, but that’s because the feel we have the right strategy. We always say our business is an extension of our clients’ business, and to that end, we try to push the envelope and create high-end, good value products. The bottom-line, is that we want to help retailers see more people go to their shops. However, what I sense is that VM businesses that sell only on price could suffer more than those that invest in quality products. When you’re selling on price alone, you’re relying on greater volumes to make up for lower margins, but I don’t believe the volume is out there right now."

Q: So what’s the outlook for the next 12 months?

A: "Business will be tough, but what I hope is that we and other visual merchandisers learn from 2008/9. We need to accept orders might be X% down, but we also need to also recognise there will be retailers that will be brave if given the right solutions. The temptation might be to stop investing in new products, but we won’t. This is short sighted. If our custom work slows, we still have the same people, so we’ll use this capability to design new ranges."

 

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