After a strong 12 months, experts are predicting continued channel growth for 2019, with digital transformation and the Fourth Industrial Revolution driving new opportunities – although macroeconomic headwinds including Brexit will inevitably have an impact.

These are the key findings from a new report issued by Context.

Technology and Channel Predictions 2019 brings together insight from channel business leaders and Context experts to reveal the biggest issues and trends facing EMEA technology companies over the coming year, and country views from some of the major economies in the region.

The past 12 months saw year-on-year growth of 6.7% in distribution, accelerating quarter-on-quarter to reach 9.1% in Q4 2018. However, growth will start to slow in Q2 2019 and will achieve 3-6% YOY growth thanks to OECD forecasts of reduced demand in EU economies and the impact of Brexit.

Context is urging channel players to ensure they have contingency plans and adequate stock in place in the event of a no-deal Brexit, and that they budget to cover any temporary downturns in revenues caused by social upheaval like the French gilets jaunes protests.

Although many distributors have been able to focus on organic growth during 2018, market consolidation is happening and could increase in 2019, driven in part by price pressure from etailers.

However, digital transformation offers a great opportunity for the channel to drive growth and differentiation this year. Those that succeed will meet growing demand for secure solutions, hybrid cloud, and hyper-converged infrastructure whilst evolving their own value propositions to align with new consumption models.

The Fourth Industrial Revolution will also bring continued growth opportunities in areas such as AI, IoT, 3D printing and autonomous vehicles (e-mobility).

Italy grew more than any other European region in 2018 and it is hoped that its performance will be similar this year. Germany closed 2018 with a solid +3.8% panel revenue growth and we expect IT distribution to grow by the same amount in 2019. However, although the UK recorded an impressive  8.7% year-on-year growth last year, Brexit could reduce that figure for 2019.

“Brexit is making any accurate predictions about UK performance extremely difficult, although all European markets are likely to continue with positive channel growth this year, even if some — like France, Spain and the UK — don’t quite match their strong 2018 numbers,” says Nick Westcott, UK & Ireland country manager at Context.

“However, for those distributors ambitious and agile enough to support their partners’ and customers’ digital transformation requirements, there are gains to be made in cloud, hyper-convergence, cybersecurity and solutions that deliver on the promise of the Fourth Industrial Revolution.”

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