Imaging trends in UK Distribution

Analyst Context's latest figures show a further decline in sales of multi-function, inkjet and laser printers through distribution

Sales of printer hardware by IT distributors across Western Europe (WE) are down by nine per cent year-on-year in early fourth quarter 2016 (the first seven weeks of the quarter), driven by weaker sales of multifunction (MF) inkjet and laser printers.

Sales of single-function (SF) laser devices have stabilised but there was a decline in sales through distributors during the period. All major WE countries, except for the UK, registered declines in distributor sales in early Q4 2016.

Unit sales of printer hardware in France, Spain and Italy were down by 10 per cent, nine per cent and 18 per cent respectively, after strong performance in Q3 2016 (see graph below). In Germany, sales continued to decline - down by 13 per cent over the period - with the fall driven by weak sales of MF devices.

However, these results cover only the first seven weeks of Q4 2016 and results are expected to improve as the quarter progresses.

In contrast to gloomy picture across most of WE, the UK saw a 16 per cent year-on-year increase in distributors' printer hardware sales in early Q4 2016.

This was driven mainly by a renewed demand for MF inkjet and laser printers: unit sales of these increased by 21 per cent and 25 per cent respectively over the period.

Distributor sales of laser SFPs were down by four per cent year-on-year, but this is an improvement on the double-digit declines seen last year. The surge of sales might be feeding demand that accumulated in the immediate aftermath of the shock Brexit result. However, as the pound continues to weaken, weaker results and uncertainty are expected in the UK over the quarters to come.

Mono laser devices continue to account for almost 60 per cent of all laser hardware sold by IT distributors in the UK, and continued to register growth of nine per cent year-on-year in early Q4 2016. As colour becomes more affordable, sales of colour laser devices continue to increase, although the first part of this quarter has seen a decline of four per cent compared to the previous year, in spite of growth in the previous quarters.

Distributor sales of business-targeted inkjet printers continued to perform positively and registered growth of 20 per cent driven by Epson and HP. Both vendors focus on the high end of the market, and account for the increase in the ASP for business-targeted inkjets of seven per cent year-on-year, which translates to average selling price of up to £105 in the UK.

Epson's sales of business-targeted inkjets increased by 35 per cent in early Q4 2016, driven by strong performance of its WorkForce WF-2630/2750 and Eco Tank ET-4500 series.

In the past year, Epson has released a wide range of high yield-capacity business-targeted inkjets and is currently working on line-head technology, which will compete with the page-wide technology used by HP and Memjet.

HP also registered a 15 per cent increase in distribution sales in the UK over the period, driven mainly by new models of OfficeJet, OfficeJet Pro and PageWide Pro series.

In contrast to distribution sell-through, printer hardware sell-in volumes to the UK continue to decline (see graph below).

Although they fell by eight per cent year-on-year in Q3 2016, this is an improvement on the double-digit declines seen in previous quarters. The fall is due to weak performance of inkjet MFPs, since unit shipments of laser hardware register positive performance for the quarter.

In terms of vendor sell-in, Epson registered unit sales growth of 18 per cent while Samsung and Ricoh registered increases in sell-in volumes of four per cent and six per cent respectively, driven by a surge in unit shipments of laser SFPs.

HP sell-in to the UK declined by 11 per cent as unit shipments of inkjet technology devices declined for the quarter. Brother printer hardware unit shipments to the UK also shrunk, by 16 per cent Y/Y in Q3 2016, driven by weaker demand for its laser SFPs.

Zivile Brazdziunaite is imaging market analyst at Context