RISK FACTORS AND INTERNAL CONTROL 2.1.1.3 Risks relating to competition of branches and sales personnel, the efficiency of Risk its logistical systems as wel l as the quality of its services. In addition to its branch network, Rexel is The market for professional distribution of low developing a multichannel offering in most countries, voltage electrical products is highly competitive, including e-commerce, thereby responding to as the products distributed by the Rexel Group clients’ expectations by simplifying administrative are general ly available from other distributors. At tasks and giving them technical advice. international level, the Rexel Group competes with several large professional electrical distributors, A comprehensive e-business platform is in place such as Anixter, CED, HD Supply, Graybar, Sonepar and progressively rol led out in different countries and Wesco. to support Rexel’s digital ly powered multichannel business model . By developing multichannel The Rexel Group also competes with independent relationships with customers, the Rexel Group is distributors that operate on international, national, seeking to increase customers’ loyalty, and new regional or local level which are part of, or may multichannel features, are constantly released in the occasional ly create, cooperative purchasing webshop to better respond to customers’ needs. organizations (buying groups such as Imelco, Furthermore, dealing with a professional distributor Fegime). rather than a manufacturer al lows customers to Furthermore, the Rexel Group may compete with: have access to a larger and more complete product Manufacturers that sel l their products directly offering. • to certain clients in the industrial and services Each year, the Rexel Group reviews its strategy and markets, essentially in connection with large-scale makes decisions taking into account market growth projects; opportunities as wel l as its competitors’ presence •Specialists in e-commerce, distributing building and market shares in order to adapt its branches materials and not exclusively electrical materials to and subsidiaries network. professionals or end-users; Lastly, in order to limit the risk of its key employees •Any larger B2B webshop, trading al l kind of joining the competition, Rexel Group entities ensure construction material products of which electrical that their remuneration pol icies are competitive products; and include non-compete clauses in employment •General building trade distributors, who could agreements when such provision makes sense in the further expand their electrical product offerings local market. or acquire companies already operating in the electrical product distribution sector and thereby 2.1.1.4 Risks relating to information technology create increased competition for the acquisition of systems market share; and •Service providers special ized in bui lding Risk maintenance or energy efficiency. In a context where cyber-attacks are more and more Actions undertaken by these competitors may have frequent and sophisticated, Rexel has to face an an adverse effect on the strategy implemented by increasing number of internal or external threats Rexel to gain new clients and market shares. which may elude the safety of its information technology systems and may cause, in particular, In addition, regional competitors and new business disruption or data theft. market entrants could attempt to hire Rexel Group’s employees, particularly sales and branch In addition to these malicious actions, the information management personnel, which may have an adverse technology systems of the Rexel Group may suffer effect on operations. deficiencies preventing their proper utilization. The competitive pressure that the Rexel Group faces Taking into account the rapid evolution of systems may therefore have an adverse effect on its financial and softwares, the Rexel Group is unable to condition or results of operations. provide assurances that information systems wil l be completely immune to circumstances that may Management of risk impact availability. A major malfunction or force In order to limit the competition risks inherent in its majeure event affecting Rexel or one of its IT service business, the Rexel Group relies on its dense network providers could have an impact on the activity, REXEL 2017 – REGISTRATION DOCUMENT 38