Glimmer of hope

Distributors in this year’s listing of the annual Power List are positive about business prospects especially in the second half of 2012 despite continued political instability, tight credit and liquidity lingering on.

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Glimmer of hope
By  Manda Banda Published  June 18, 2012

Distributors in this year’s listing of the annual Power List are positive about business prospects especially in the second half of 2012 despite continued political instability, tight credit and liquidity lingering on.

This month Channel Middle East reveals the 2012 Power List, our annual ranking by sales revenues of the top distributors in the Middle East region.

Now in its eighth year, the Power List surveys leading distributors in the region, based on financial performance from the previous financial year.

After much research and countless interviews, the overall financial performances from the IT distribution sector shows a remarked improvement over the 2010 numbers.

Taking into consideration the companies that made the list, the distribution business they conducted in financial year 2011 was worth a total of $6.066 billion, up 12.6% from last year’s Power List figure of $5.3 billion.

Of course these are figures of those distributors that made the research and we are under no illusions that this is in fact the total size of the distribution industry in the region. The market size and business conducted by those involved in IT distribution last year is bigger than these figures. However, what these numbers are telling us is that the market is picking up despite a tough business climate in 2011.

Clearly, from these figures, one cannot deny the fact that the Middle East IT distribution sector is slowly recovering from the global economic meltdown that shook the entire IT market three years ago. Overall, demand for IT products is beginning to pick-up, particularly in Q1 of 2012. Although the commercial sector is still waiting for Microsoft to release its much-anticipated Windows 8 OS, all the distributors I spoke to were in unison about the consumer market. In fact, demand for mobile devices such as smartphones, tablets and Ultrabooks in the consumer electronics segment has driven most distributors in Dubai to pay more attention to this important sector.

Many revealed that they see the retail space as another opportunity to broaden their revenue streams in addition to their commercial, enterprise, value and export vertical focus.

While this time last year, the market was volatile with a spate of reseller runaways rocking the Dubai channel, this time around the picture is rosy as the channel outlook for Dubai and at regional level has improved somewhat.

Indeed, expansion plans into North Africa, Levant and the rest of Africa may have been put on hold in 2011, but most of the distributors I spoke to indicated they will be expanding their operations into new geographies and markets this year.

Interestingly, six distributors that made the Power List this year, all confirmed to have plans to establish full-fledged operations in Iraq, a market many feel has all the right indicators to become a noteworthy contributor to the regional IT business.

Aside from the expansion plans, most distributors in the market today are educating and working with their partners to prudently manage credit going forward. These initiatives have been positive indicators from a cash flow and lending perspective which is good for businesses in the region and we haven’t seen the spate of reseller runaways like was the case last year.

At the same time, the development of multi-channel models in the region presents opportunities, as well as challenges for distributors. These new channels are changing faster, making it difficult for some distributors to keep up pace.

The traditional distribution model may have been in vogue for over a decade, but the market has changed from both the channel and consumer perspective. Distributors that will be able to make their mark going forward are those that will adapt quickly to the changing market around them and embrace these multi-channel models.

1972 days ago
Alain

Sorry to say, but "expansion plans into North Africa" are seldom efficient from my own experience, especially for French-speaking North Africa. The only ME distributors which are indeed present there have a local salesman who is able to speak French. That is, a handful of them only, compared to the tens claiming to cover the region…

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