REVIEW DSS EUROPE 2019: VERTICAL CONSOLIDATION GATHERS MOMENTUM

DSS Europe’s M&A panel saw leading European Digital Signage providers discuss the driving forces behind increasing consolidation. In addition to horizontal takeovers, the industry also saw a marked increase in vertical takeovers.

To begin with, the invidis strategy consultants presented the background and market drivers for consolidation in the DSS Market Keynote. The past 12 months have been the most active period to date, with tens of thousands of major transactions in the EMEA Digital Signage market. In Germany, the takeover of Gundlach Seen Media by the Austrian Umdasch Shopfitting Group dominated industry headlines.

Internationally, Spanish company Trison acquired leading Digital Signage integrators in both France and the UK. During the panel, Trison CEO Alberto Cáceres explained the reasons behind the horizontal expansion. Systems integrators will need to have their own offices and staff in all the major Digital Signage markets to deliver global service to customers with local market proximity. Of course, the DACH market is also high on the wishlist for Trison, and represents just one of many overseas markets to conquer.

In the future, global Digital Signage integrators will need to be able to grow with their local customers worldwide whilst also attracting international customers to their home markets – a balancing act which currently only a few pure play providers are capable of. This is where the strength of the big IT and professional service organisations such as Accenture, Cap Gemini or Deloitte Digital comes into play.

An example of vertical expansion can be seen with the acquisition of Seen Media by Umdasch. The Austrians are one of the leading shopfitters in Europe and were previously only represented by a smaller digital subsidiary in Linz. In order to offer clients a full Digital Signage portfolio – especially with regard to project design and integration – the decision was taken to acquire Seen Media. The new in-house full-service integrator can now offer additional solutions to existing customers. Markus Deserno explained why he and Stefan Knoke feel Seen Media has landed in good hands: “Customer access is completely different. We can now offer the customer everything from retail design to retail technology as one holistic solution.”

By contrast, Leif Liljebrunn, CEO of Swedish company Zeta Display, looked back on a turbulent M&A history. A total of six competitors have been acquired – mainly in Scandinavia – over the past five years. The Swedes are in the final stages of consolidating their different CMS platforms and companies onto one common platform and common structure. Malmö is still looking for suitable takeover candidates to ensure better positioning throughout Europe.

Swiss Digital Signage market leader JLS Digital was represented on the panel by CEO Patrick Minder. In contrast to the other market participants, Panasonic-founded JLS merged with a digital agency and was ultimately acquired by a Swiss pension fund. Thankfully, the new owners are giving the company’s management enough breathing space to grow the company successfully in the difficult Swiss market.

Switzerland is an extremely demanding market in terms of quality, service and multilingualism. For foreign providers, the market is relatively hard to conquer. Swiss providers, on the other hand, struggle to win tenders for EU projects as a result of their high domestic costs. Nevertheless, JLS Digital sees enough potential with its partners to operate successfully beyond the borders of Switzerland.

An exceptional geographic and strategic example is Stewart Caddick’s RCD. At DSS, the Dubai-based retail architect explained how his decision to build a Digital Signage integrator, alongside an architecture office, ultimately served to provide holistic implementation of digital concepts. Competent integrators are a scarce commodity in the Gulf region. RCD Connectiv also acquired the Middle Eastern wing of RMG with its 15 employees and strong presence in Saudi Arabia. This vertical – and now also horizontal – expansion had become necessary to plan and implement the sophisticated concepts of Digital Signage and Digital Retail in the region.

All participants on the panel agreed that the process of consolidation has just begun, with many more deals needed to create real European champions. The panel were divided, however, over whether a dedicated (CMS) software system is necessary.