Time for Channel Players to Place their Bets as Product Shortages Bit
High quality market analysis is at a growing premium as European channel businesses try to make sound strategic decisions to minimise the impact of product shortages, according to CONTEXT, the IT market intelligence company.
The latest data from CONTEXT presented at the recent GTDC and CONTEXT webinar, reveals that for the past year, the supply of notebooks (2 weeks), desktops (3-4 weeks), monitors (two weeks) and printers (0.5 weeks) has been running on empty.
A straw poll CONTEXT recently conducted among a small number of channel executives also found a majority or near-majority claiming they’re seeing a 15%+ shortage in notebooks (68%), monitors (50%), networking products (50%), printing consumables (46%), and printers (41%).
Amidst the shortfall, channel businesses need clarity of market intelligence to understand how best to proceed. Some key questions to answer include:
how much of order backlogs is actually panic buying?
how much of the current market picture is down to change in demand and how much is a result of product shortages?
how can I best predict and secure prices?
how big an impact are supply chain issues having and how can I make sure they’re as robust as possible?
“Everything with a chip in it is currently experiencing product shortages. There’s a high level of anxiety from retailers about how they’re going to serve customers in Q4”, says Adam Simon, Global MD at CONTEXT. “Two big questions remain: where do you place your bets, and how do you manage price uncertainty? Do you bet on solidity and commercial demand or that the consumer boom will continue? Do you go for premium or low-cost products? Do you go for long or short-term contracting? And when and how do you pass price rises on to end customers? These are the tough decisions channel businesses are having to make, which will have a big impact on their success.”
In spite of the challenges facing the channel, tech stocks continue to soar. Figures for September 2021 versus two years previously show big gains for tech retail (32%), imaging (35%), infrastructure (40%), personal systems (82%), headsets/webcams (108%), distribution (226%) and GAFAM (123%).
Other factors mitigating the challenge of product shortages for the channel include: rising prices and huge investment in production facilities by governments and chip companies. Also of note are longer-term prospects for innovation, including hardware demand from education, cloud transformation and distribution-as-a-service.