APC 2012 Annual Report Download - page 22

2012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC20
OVERVIEW OF THEGROUP’S STRATEGY, MARKETS AND BUSINESSES
1BUSINESSES, END-MARKETS ANDCUSTOMER CHANNELS
Residential
2.3 Products and Solutions, two complementary business models
The businesses in each of our fi ve segments offer products and
solutions. Solutions are comprised of systems, such as highly
customized products or combinations of our products, and
services. Our products and solutions businesses have different
revenue growth and profi tability profi les, with our solutions business
complementing our products business by providing us with access
to the less capital intensive service market.
Product business model
We believe our products offer best-in-class technology, strong
channel access and optimal quality and cost, which allows us
to achieve scale and pricing advantages in the markets in which
we operate. We market and sell our products principally through
distributors and direct partners, such as contractors, system
integrators and electricians, who provide us with the ability to reach
large numbers of small- and medium-sized customers.
Solution business model
We believe our solutions offer leading technology, strong integration
and service capabilities and segment-specifi c expertise. We market
and sell our solutions principally through direct partners, such as
contractors and system integrators, that provide us, our distributors
and other partners with access to larger customers. We also
distribute our solutions directly to existing customers.
2.4 Multiple accesses to market
A large portion of Group revenues are made through intermediaries
such as distributors, systems integrators, installers and purchasing
advisors, who all bring their own added value and know-how,
allowing the Group to access a number of different markets.
Distributors
Distributors account for approximately 50% of the Group’s total
revenues through an extensive network in 190 countries all over
the world.
Schneider Electric works with many different types of distributors:
local distributors, wholesalers and non-specialised professional
distributors, large international groups such as Rexel, Sonepar,
Graybar and Grainger, IT specialists such as Tech Data and
Ingram Micro in the United States. In the residential renovation
sector, Schneider Electric also sells products through large home
improvement chains such as Home Depot and Lowes in the US,
Kingfi sher in the UK and Saint Gobain Distribution in France. In
addition, the Group uses specialist distribution channels for highly
technical products such as automation solutions and industrial
software, as well as for Pelco’s access control and security products.
Schneider Electric assists its distributors in advising their customers
and helping them to benefi t from technical innovations. To maintain
a high performance network, the Group works hand in hand
with distributors on supply chain issues, technical training and
marketing. Internet tools now occupy a dominant position for sales,
and above all, provide up-to-date information. Through the eShop,
distributors can link Schneider Electric’s product database to their
e-commerce sites so that customers have reliable 24/7 access
to information. As part of a program to develop energy effi ciency
solutions with distributors, the Group has published a catalogue of
energy effi ciency solutions that suit the needs of different markets
and customer segments.
Other intermediaries
Panel builders and systems integrators
The main objective for Schneider Electric is to help these
professionals to extend their competencies by giving them the best
level of service available anywhere in the world.
Panel builders, of which there are more than 20,000 throughout
the world, make and sell electrical distribution or control/
monitoring switchboards, primarily for the buildings, energy
and electricity infrastructure markets. Their main customers
are contractors. Panel builders mostly buy low and medium
voltage devices, such as circuit breakers and contactors, and
increasingly, prefabricated systems.
Our market in the context of single-family homes and apartment
buildings is driven, particularly in mature economies, by renovation
and refurbishment needs, as well as by construction and upgrades,
particularly in new economies. Whether used for renovation or
construction, the underlying challenge is to reconcile technical
constraints and local standards and regulations with customers’
preferences. Consumers require comfort and aesthetics, but
increasingly desire energy effi ciency, connectivity, security and
monitoring services as well. Our main customers in this market
include electricians, architects and decorators, those involved in the
home automation industry, lighting and security fi rms, construction
fi rms, contractors, electrical equipment distributors and large
do- it- yourself (“DIY”) stores, as well as end users and home owners.