Plimsoll: Three in ten UK resellers in the red

Spectre of inflation is hammering resellers' bottom with three in ten now loss making

Reseller margins are being squeezed by inflation with 30 per cent of the UK's top 1,000 players now making a loss.

That's the headline finding from the latest research on the UK ICT reseller market from market watcher Plimsoll and represents a rise on Plimsoll figures from two years ago.

According to the analyst, 302 of the top 1,000 UK resellers are losing money with 152 of these doing so for the second year running. Average profit margins now stand at two per cent, while 55 per cent have seen their gross margins fall in the past year.

Plimsoll lead analyst David Pattison said many resellers are struggling to pass on rising costs to customers as competitive pressure is restricting their pricing power.

"Whether it is fuel, materials or wage demands, every company in the UK ICT Resellers industry is being squeezed by ever-increasing costs," he said.

"Many are reluctant to pass on price rises for fear of losing customers to cost-savvy competitors. However, falling profit margins across the industry is the first warning sign that this strategy has become unsustainable".

But Pattison concluded on an upbeat note, saying: "Nearly 400 companies have managed to increase their profit margins over the same period. In all, 698 companies have managed to stay in the black despite rising costs. Clearly, operating profitably in the UK ICT Resellers industry is difficult but not, as yet, impossible."