The French correction

Traditionally spending in France has largely been driven by the state, so its priorities often dictate which markets prosper. InAVate takes a look at the AV industry in a country recently described by its own Prime Minister as “bankrupt”…

InAVate last looked at the French market in June 2007. High hopes, spurred by the anticipation of promarket reforms and a post-election boom in government spending, were pinned on the then newlyelected President, Nicolas Sarkozy.
Fifteen months later and we thought we’d take another look at the French market place. Is the money flowing? Is business good? Are things generally looking up?
“They’re worse,” says Pierre Laporte, sales manager at Paris based integrator, Diversity. “The government can’t spend more money because it has no money to spend.”
As French Prime Minister, Francois Fillon, said in September 2007: "I am at the head of a state that is in a position of bankruptcy. "I am at the head of a state that for 15 years has been in chronic deficit. I am at the head of a state that has not once passed a balanced budget in 25 years. This can't go on."
When you are talking about the largest customer in the French AV market being broke, things don’t look too good.
Laporte says government spending is now all about priorities. “If you had the choice would you prefer to spend money on people who are living on the street, or would you give it to some museum to change the PA each year? “We have to realise some things we prioritise cost a lot. We have SNCF which, unlike the UK rail transportation system, is not private. But if we compare French trains with UK trains – there is no comparison. If you compare French hospitals with UK hospitals – there is no comparison.”
SNCF covers 32,000km and employs 180,000 people, while its health service was ranked first worldwide by the World Health Organisation in 2007. So money well spent?
In a way yes, but not for French AV distributors, re-sellers and integrators, according to Laporte. “France has spent too much money for many, many years and now we are coming back to a real situation. Take for example the broadcast market. We were spending money on digital consoles, which were often not necessary. Less expensive consoles could be bought. And now there is no more budget many manufacturers are finding people will no longer buy their products.”
But to a certain extent, Laporte thinks the market is correcting itself. “We have to realise we spent too much money. We lived during years and years in France as if we were really, really rich, which was not the case. Now we realise we are not such a rich country and we have to make some cut-backs.”
When money is spent now it is with careful consideration, according to Laporte. He says: “Manufacturers produce products that are reliable for longer and longer, so why do you want to change products every one, two or three years? You don’t, you change after five, six or seven years.”
Laporte says demand is drying up in all AV markets and the lack of demand is exacerbated by too little supply. “Too many distributors, too many resellers, too many products. Not enough business, not enough customers, and not enough customers with money.”
The spiral has to end somewhere and Laporte predicts some companies may go out of business. And if you thought things couldn’t get worse, Laporte says pressures to lower prices are adding to the lack of business in the country. “There is too much competition on products and it’s killing prices. We do the same turnover with less margin year after year.”
Laporte also blames the state of the country’s economy for a perception that the French are less adventurous when it comes to trying new products and innovations. “Historically France has been very adventurous but when you have to watch your spend you cannot afford to take a risk on a new product or technology.
“We are returning to a normal situation where we buy products that work properly. If a product costs a lot clients will look at how a product is doing in the UK, Germany, the States and buy what works.
“Now it seems that people think that France doesn’t spend money because we are not the first to believe in a new product or new technology. The reality is we can’t take the risk because there is not enough money in circulation.
“Take Radio France ten years ago. It would try a product and change it after a year because it wasn’t right or didn’t work. Now that time is finished. When it has a project it has to buy an established product and it has to work because if it doesn’t they won’t have another budget before five years.”
Ever the optimist, Larporte suggests this attitude can have a positive side. “Customers do not buy the wrong product, or a product that doesn’t work. Manufacturers used to be happy to send products to France to test. There is a market, not the same as five or ten years ago but now customers take care of what they buy.” So it seems there is still business to be had out there, even if it does seem greatly diminished, largely because of a lack of government spending. As customers get more astute and conservative in their choices, due to a lack of budget, integrators and manufacturers must become more innovative to offer workable solutions that provide functionality at a reasonable price.
Laporte: “There are some manufacturers who don’t understand why they don’t sell any more – they don’t sell because they don’t have the right product at the right price.” There may be a certain amount of belt tightening ahead but the companies that weather the conditions will probably see better times
“Will things get better? They definitely can’t get worse. The market will stay like this for six months or maybe a year but then who knows,” concluded Laporte.

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