After the storm
Is the region's hardcopy peripherals market making its way back to growth?
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Following a disastrous period in 2008/09 when the value of the hardcopy peripherals (HCP) and consumables sector plummeted worldwide, key industry stakeholders believe 2011 will mark a period of sustained recovery, despite the ongoing challenges posed by counterfeit goods and grey market trade. Aaron Greenwood reports.
While cautious optimism crept back into the EMEA HCP and consumables sector in 2010 after a disastrous slump which coincided with the financial crash of 2008/09, manufacturers and industry observers are united in their belief market conditions will improve further in 2011.
This prediction reflects market research conducted by IDC, which found global consumables shipments returned to pre-crisis levels of close to 31 million units in Q3, 2010. Central and Eastern Europe and the Middle East and Africa accounted for almost four million units, or 13% of total shipments worldwide, during the period. This result contrasts most significantly with the market’s performance in the first half of 2009, when it retracted by 13.1% compared to the previous corresponding period in 2008.
While the industry’s big guns bore the brunt of the downturn, aftermarket and third-party consumables suppliers enjoyed booming demand, reflecting the financial pressures exerted on buying patterns by the global economic crisis.
Indeed, during the same period, IDC found that third-party toner consumables shipments increased by 5.1% year-on-year, while toner aftermarket suppliers had increased their total share of the market by 7.7%.
IDC claimed this trend was mostly apparent in emerging markets, particularly the Middle East and Africa, where many clients remained indifferent to the concept of brand loyalty and often sought the cheapest legitimate option when making purchasing decisions.
Still, industry giant HP remains the industry’s biggest supplier of consumables worldwide, with an estimated 44% share of the market. Canon trails its American rival in second place, with 17% market share, while Epson follows closely behind with 14%. In the Middle East, HP consolidated its position in 2010, according to Ali Nemati, channel sales manager of the company’s Middle East Imaging & Printing Group.
“Naturally we saw the effects of the global crisis, and the effect it had on the Middle East was delayed, but it did effect us,” he says. “Slowly and steadily we have gone back to the normal business activity levels, and the trends are very positive… For us, 2010 was a very positive year. There were a lot of things that contributed to that, when people started coming out of the shock of the beginning of the crisis. Once that disappeared, confidence started to come back and with that came business activity.”
This view is supported by Sidney Pereira, product manager for Canon Middle East. “During the recession, consumers and corporates were more conscious of their expenses and made every effort to cut costs, which impacted sales of consumables,” he says. “However, last year, as business conditions showed signs of improvement, demand for consumables increased.”
While many consumable suppliers struggled through the crisis, Brother Gulf bucked the downward trend to report significant growth in the Middle East, albeit from a relatively small market base.
According to IDC, while Brother maintained the smallest share of the consumables market worldwide in its Q3 survey with just 5% of total sales, it reported impressive year-on-year growth in the Middle East of 73%.
“Surprisingly and positively, for Brother Gulf, consumable sales continued to grow in 2008 and 2009,” explains Ranjit Gurkar, general manager of Brother Gulf. “The effect of the economic downturn was felt in 2009, on HCPs, where there was no growth for our business.
“In 2010, we saw double digit growth in terms of units and value of HCPs, however consumable sales remained flat. This was mainly due to the global economic downturn, and an actual drop in average monthly print volumes in offices.”
Gurkar argues that 2010 was also characterised by the increasing availability of counterfeit products in the region, which he attributes to customers’ seeking cheaper alternatives when purchasing.
This claim is backed by IDC research, which found counterfeit goods accounted for 3.7% of total volumes in the Middle East in 2009, compared to 0.5% in Western Europe.
However, the firm believes improving economic conditions in 2011 will see demand for genuine products recover in the region. Gurkar says Brother Gulf has taken measures to combat the spread of counterfeit goods over the past 12 to 24 months.
“We investigated any and all sources of cheap consumables to ascertain whether they were counterfeit. Prompt legal action was taken where required,” he says.