Context: UK distribution shows strength in Q2

The word that has often been associated with the channel is “evolution”, referring to the legendary ability to adapt to changing circumstances, but these days, that has been replaced by “resilience”.

There is still a need to evolve propositions and react to artificial intelligence (AI), changing security demands and customer demands, but at the same time, the channel must also navigate uncertain economic conditions.

The latest analysis of the performance of UK distribution from Context indicates that this tier of the channel is showing resilience and growing, despite ongoing uncertainty.

The analyst house found there was 6.5% year-on-year growth in the second quarter of 2025, which saw the UK outperform most other major countries.

“Businesses and households are clearly facing strong financial headwinds, from rising fuel and freight costs to new tax pressures and declining payroll employment,” said Nick Westcott, UK country manager for Context.

“Yet the UK channel continues to demonstrate remarkable agility and depth. Strong growth across all three business channels has driven this upward momentum, and it’s the first time since the third quarter in 2024 that we’ve seen that kind of synchronised performance,” he added.

Growth across corporate, small and medium-sized enterprise (SME) resellers and e-tailer businesses all helped drive UK distribution’s year-on-year improvements.

Context highlighted June as a particularly strong month on the SME front, as customers looked to refresh PCs and adopt the latest software applications.

“The e-tailer business channel was a standout performer in percentage terms, with 27% growth in April and 21% in June. Although its overall share is smaller, the contribution to the sector’s strength is significant,” said Westcott.

As well as the enterprise and SME markets delivering growth, the portion of consumer channel business – which accounts for around 20% of total distribution activity – was also strong during the quarter.

Consumers were prepared to spend on a range of products, including monitors, graphics cards and software, as they refreshed their systems.

Growth in consumer business, fuelled by strong demand from retail chains, saw 26% growth, compared with the same quarter last year.

“Retail sales are doing the heavy lifting in [the] consumer [market], with five consecutive quarters of growth. That speaks volumes about where demand is coming from. And it is not just replacement cycles – higher prices and appetite for performance upgrades in graphics and components also played a role,” said Westcott.

There are different patterns of demand between traditional retailers and e-commerce players, and distribution has had to navigate those trends during the past three months to ensure it can maximise the growth opportunity.

“This is a market that refuses to sit still. From software momentum in [the SME market] to monitor [sales] surges in retail, we’re seeing clear signs of opportunity, even amid the noise of economic uncertainty. Our market intelligence shows that partners who can read these signals and adapt fast will continue to outperform,” added Westcott.

The Context figures add to a growing picture of PC refresh activity, led by the shift to Windows 11. Last week, research from Dell and Intel indicated that the smaller end of the SME market was lagging behind in migrating to the latest Microsoft operating system, which presents a clear opportunity for the channel.

The report also underlined the growing interest in AI from customers of all sizes and their keenness to move to PC models that provide AI functionality.