Sales spillage

The consumables channel has found the past year a slog as recession-hit customers have taken stock of their outlay on peripheral products. Channel Middle East gathered a selection of influential printer vendors, distributors and consumers to canvass their opinions on price, parallel imports and the growing threat of third party remanufacturers

Tags: Al Suwaidi ComputerCanon Middle EastConsumablesDespecHP Middle EastPrinterUnited Arab EmiratesXerox Emirates L.L.C.
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Sales spillage
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By  Andrew Seymour Published  February 12, 2010 Channel Middle East Logo

We spoke to: Ali Nemati, sales manager at HP Middle East's Imaging and Printing Group; Sidney Pereira, inkjet product manager at Canon Middle East; Dan Smith, general manager for integrated marketing for the Middle East and Africa region of Xerox's developing markets operations; Faisal Jamal, COO at Despec MERA; George Saliba, sales manager at Medmark; and Ketan Kumar, business development manager at Al Suwaidi Computer.

IDC figures show that the market for consumables in countries such as the UAE and Egypt declined significantly during various quarters of last year. How long will this volatility continue for and what impact is it having on the channel supply chain?

Ali Nemati: We have seen a very strong performance in our consumables business in the second half of 2009 and our forecasts for the first quarter of 2010 are quite positive. In the first half of 2009 - and I have seen those IDC figures - the main issue was of course the global economic situation and the downturn in business activity. People were not really working as much, so they were not printing as much, and that was a major factor. The subsequent credit issues in our channel for all businesses was another factor, so partners were not doing the typical level of activity that we are used to seeing from them.

Sidney Pereira: The slowdown in sales of consumables during the last year was an outcome of the recession as companies were more conscious of their expenses and made every effort to cut costs. There are signs that this decline will halt during 2010 and the market is expected to grow in single digits over the next two to three years. The channel has had to adapt to this change in scenario and has moved into a more cautious approach in terms of reduced inventory and more back-to-back ordering from the distributors.

George Saliba: During 2009, almost all the main vendors increased the prices for the consumables by up to 10%, especially in the first quarter. This led to a sales drop in the Middle East and opened the doors to parallel imports from the Far East - Singapore - where all the prices were still fixed. In Egypt, the market is always in favour of refill and remanufactured products, where the prices can reach up to 50% less than the OEM price.

Faisal Jamal: I think we saw a few signs of recovery in November and December - they were much better months than the rest of the year. January is looking a little bit more positive as well. It seems some of the big end-user contracts and tenders are now being awarded and released. But this is also expected in the Q4-Q1 period because it is meant to be a good period. The real test is going to be from April and May onwards and whether we are at least going to start seeing stable growth compared to last year or whether we are going to see another dip again. 

What is your strategy for driving consumables demand in the next 12 months and how will it differ to your strategy last year?

Ketan Kumar: The Al Suwaidi Group has consistently advocated the importance of the quality of service rendered to its customers. We believe that our success so far is a testimony to that very philosophy, towards which we intend on staying committed in the year ahead. Unlike 2008 and 2009, where a lot of our emphasis was placed on operational issues like procurement, logistics and warehousing to facilitate the HP consumables trade, 2010 shall see the ‘customer-service' aspect of our business become prominent.

Ali Nemati: IPG significantly revamped its channel strategy and programmes in 2009. Of course, with the disbanding of the SPO organisation we have the IPG channel sales team which is led by myself within the IPG business unit. So, first of all, we integrated our supplies business with our hardware business and this was a pretty big move. Secondly, our channel programmes were also integrated to support the partners on both the hardware and supplies portfolio. We wanted to have a greater focus on the overall IPG business with our partners. We no longer have separate specialisations for each of the businesses, so we have partners today that can offer the full IPG portfolio. We also increased our investment in our channel team and today I manage the largest IPG specialised channel sales team in the history of IPG Middle East.

George Saliba: During 2010, Medmark's strategy to drive consumables demand will be based on increasing the availability of the fast-moving models and bundling hardware plus supplies to guarantee the sales of consumables. We will also increase the number of dealers per country.

Sidney Pereira: The demand for consumables is poised to grow as companies and business in general emerge from the downturn. Factors like ‘cost per copy' and ‘total cost of ownership' now gain more significance than ever before as consumers look for the way to control costs. Canon is one of the first vendors to implement ISO standards for measuring print yields, thus advocating a transparent and common benchmark for measuring the output of each cartridge and, subsequently, the cost per copy.

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