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Context: Shortages causing concern, but distributors optimistic

The first few weeks of this year have come on the back of a solid Q4, but it is still difficult to get stocks in some hardware product categories

Distributors across Europe, by and large, had a decent 2020 and the signs are that the pace has not dropped over the first few weeks of this year.

Apart from the ongoing coronavirus pandemic, the main difficulty for the channel is around supply issues, which are causing some concerns.

Market watcher Context has found that so far this month, distributors across Europe have less than two weeks of stock in notebooks, although that situation is slowly improving. Monitors have also been another category in short supply throughout Q4 2020 and into January, with less than one week’s stock. Printers are also a headache category, with almost no stocks out in the channel.

But despite those issues, the overall feeling across the Western European distribution channel is optimism. Context has released its latest Weekly Revenue Trend Index and found that at the start of the year, only France was in a worse position than at the start of 2020.

The customer response to the restrictions imposed by Covid-19 have led to demand outstripping supply in some of the key product areas that support people working from home.

Context found that mobile computing, monitors, computing accessories and AV systems all saw double-digit growth year on year in the past 12 months. Computing components, software and licences, and smart home products and wearables also saw customer interest rising.

The printing segment has had a tough time during Covid-19, with most commercial fleets gathering dust in shuttered offices. But increases in demand over Q4 indicated that the year ahead should be better for those selling printers and consumables.

Context has already released figures covering the performance of distribution over the last quarter of 2020, with European distribution sales hitting a record €26.3bn, with year-on-year growth of 10.2%.

“We knew that growth was more likely to go up than down in Q4, but we never anticipated such an impressive fourth quarter,” said Context’s global managing director Adam Simon. “Our predictions were consistently beaten by the channel in 2020.

“It’s also great to see the small and medium reseller channel bounce back from a tough 2020 with a stronger start to this year than last, while retail chain and etail consumer sales have been outstanding in Q4 and in January.”

There have already been indications from a host of channel players that the second half of last year was strong and there are expectations that the momentum in the market will continue, with healthy pipelines providing confidence for a good 2021.

This morning, Computacenter shared an upbeat trading update, which followed similar reports from Softcat and Agilitas. On the distribution front, AV specialist Midwich Group revealed earlier this week that a strong second half had helped it bounce back from a tough coronavirus-impacted first half.

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