European Channel Revenue Growth Bounces Back but Q2 On Track for 4% Decline
European revenue growth in distribution climbed into positive year-on-year figures for the first time in a month during the week ending April 26 (week 17), but reduced business and consumer demand is likely to see overall figures decline in Q2, according to CONTEXT, the IT market intelligence company.
The latest figures from CONTEXT’s Covid-19 weekly report show the four-week rolling average for year-on-year revenue sales growth climbing from -10% in week 16 to +4.6% in week 17, outperforming 2019 figures for the same period of -1.9%.
All countries across the region showed the same upward curve, to a lesser or greater extent, although France and Italy remain soft. Yet while this stabilisation of channel growth after a few weeks of sharp decline during the pandemic is to be welcomed, the overall picture for Q2 is likely to see revenue growth slip into negative figures again.
CONTEXT forecasts year-on-year growth slipping to -4.1% in Q2, down from 4.8% in Q1.
The three standout categories for revenue growth are projected to be AV systems (30%), mobile and desktop computing (6%) and software and licenses (6%).
In week 17, mobile computing (41%), software and licenses (20%), AV systems (22%), warranties and service (22%), games consoles (56%) and eHealth devices (42%) all performed well.
The biggest losers in Q2 are forecast to be telecoms (-30%), printing hardware and consumables (-20%), displays (-14%) and infrastructure and security (-10%).
“Aside from notebooks and some other consumer products, the challenge for the channel remains demand rather than supply. With most of Europe still furloughed, B2B projects have been put on hold, while consumer sentiment is dropping fast as unemployment bites and savings are depleted”, said Adam Simon, CONTEXT Global Managing Director. “However, there are some bright spots. Mobile computing and software will account for nearly €7bn in revenue in Q2 and computing components are making a turnaround as supply issues ease.”
Most channel players whom CONTEXT surveyed (74%) believe business won’t return to pre-pandemic levels until next year. The figure was just 21% when the same question was asked four weeks earlier, with most (53%) believing things would get back to normal by the end of 2020. “The situation is fast moving, and we are seeing the value which weekly tracking can bring in this time of rapid change.”