Easter holidays and supply issues reverse some March gains

Research from Context has found that the growth rates experienced by the channel in March took a hit at the start of April

There are signs that supply issues and the impact of the Easter holidays have taken some toll on the channel over the last few weeks.

Despite the coronavirus and the lockdown, most of the channel  has seen business maintain levels comparable with 2019 during the first few weeks of the lockdown, as customers sought assistance in moving to a remote working environment.

But the Easter break, and the double bank holiday days of Good Friday and Easter Monday, reduced trading and pushed the UK into its first declines of the year, according to analysis from Context. The same issues also had an impact on trading in Germany and Spain.

The market watchers have been using a rolling four-week average to track the response to the virus and found that the last few weeks, to 6 April, have been tougher for the channel across Western Europe.

A surge in demand for home working hardware and software had bolstered growth across the region, helping the channel to produce 10% growth in the week of 16 March.

But that proved to be the high watermark and since then the growth numbers have been falling, with 2020 numbers slipping behind last year’s performance. The impact of the reversal was spread across the channel, with the distribution channel and SME and corporate resellers all finding things slowing down. The only bright spot was in the etail sector, which continued to enjoy year-on-year growth, but that accounts for a smaller slice of the overall market.

“Supply shortages in certain popular consumer products combined with a slowdown in enterprise activity meant that week 14 did not display a quarterly peak in Europe,” said Context global managing director Adam Simon. “In fact, growth fell from 9.2% the previous week to just 0.5%. In the US, by contrast, growth held up pretty well, rising from 8% to 9% over the period.”

Many product categories do remain in high demand and the channel continues to benefit from those. Web cameras (102%), virtualisation software (48%), notebooks (29%), headsets and microphones (27%), workstations (27%), ink cartridges (19%) and all-in-one inkjets (18%) are all up year-on-year.

That ongoing demand, coupled with the Easter holidays having ended, bode well for the next few weeks across the channel.

“There is still high demand in Europe across many home working categories,” said Simon. “So channel resellers can hope to expect better growth now the Easter break is behind them, especially if supply shortages ease as they move through the second quarter.”

With China largely back up and running, the expectation is that in many product categories, supply issues are easing and the problems suffered on that front will become easier for vendors and distributors to manage.

Prime minister Boris Johnson spoke this morning about the need for the current lockdown restrictions to stay in place and experts believe that even if measures are eased, the need for social distancing and remote working will remain in place, possibly for the rest of the year.

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