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Driving the brands

By Leslie Shiers

Friday 16th December 2005

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When he pulls alongside a school bus, kids will excitedly wave their iPods at Paul Johnston, managing director of Renaissance. Granted, they probably don't recognise him as head of the company that distributes the MP3 players around New Zealand. Likely it's more to do with what he's driving - a flashy Mini Cooper emblazoned with Apple logos for a summer promotion.

Johnston has no qualms about being the man behind the brand, as this is what his Auckland-based, publicly listed company does best. "If you know the brands we carry, but you don't necessarily know that we carry them, we're probably doing our job right."

Renaissance has done well out of distributing some popular brands but it took some quick-footed restructuring to make the IT business profitable. Five years ago rapid distribution expansion led to increasing sales. When Unlimited wrote about the company in March, 2001, it had undergone a revival from the late 90s when its share price languished below 20 cents to become the best-performer on the New Zealand Stock Exchange in 2000. But then things started going wrong again. Low profit margins left the company losing money on its PC brands, as well as networking, software and peripheral products. Eliminating those poor-performing product lines in 2002 meant sales dropped, but by focusing on its core strength of marketing and distributing exclusive brands, Renaissance was back in the black by 2003.

And it's not all due to Apple. Renaissance may be perceived in the marketplace as a one-trick pony, but while the Apple Computer Division has grown dramatically, Johnston says Renaissance's other segments - Renaissance Brands, Conduit, Insite and Itas - have grown even faster. Since the beginning of 2004 the company has added 35 employees, to now total 175. In 2004 profit was $2.3 million.

Renaissance Brands represents vendors including Asus, Palm and Sierra Wireless. The company has taken risks that paid off: early acceptance of LCD and plasma screens proved profitable when that technology became mainstream, and a quiet entrance into the telecoms market also brought rewards.
Its spinoff e-commerce service provider Conduit faced difficult times when the online shopping bubble burst but is now enjoying increased demand, which Johnston chalks up to companies recognising the benefits of online retail - when it's done right. Conduit provided the back-end engine for Telecom's much-hyped new retail website, Ferrit.

When PC distribution cratered, staff at Christchurch-based Insite created a new niche: building their own computers and network systems from overstocked parts. Today it assembles the R1, a UK-designed desktop PC made to withstand student abuse with a toughened screen, anti-graffiti paint and built-in security features. Resold by Itas, which provides hardware and software for the education sector, the R1 sold out immediately.

Renaissance will incorporate Itas and Apple's education-related products into one business, the Renaissance Education Division (RED), in January to better meet schools' needs. Johnston believes many schools make fundamental errors when it comes to investing in IT, and suppliers aren't giving them good advice on long-term strategies. "Kids get technology, and if they're given the right guidance, almost anything is possible," Johnston says.

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