Plimsoll: One third of VARs showing no signs of growth

Research suggests one in five resellers are making a loss, and it might not get better next year

One in three resellers has shown no signs of growth at all in the past year, according to analyst Plimsoll, which also claims that one fifth are running at a loss.

The figures, published in the firm's ICT Resellers Industry Report 2013, are partly put down to larger, more successful resellers aggressively targeting their competition, making it near impossible for them to grow.

Plimsoll claims that average reseller margins remain low but steady, and it further suggests that each VAR is making a 2.6 per cent return on average.

Plimsoll's general manager David Pattison said growth is difficult in a competitive market.

"Despite the technical advancements in the industry, as you look back through time, growth has only ever gone up to modest numbers; that is not new. Growth trends have declined, so it is not going to be easy to grow," he added.

"[But the] industry is very competitive and there are signs that some firms are growing faster than that. This puts pressure on the market; if one firm grows 12 per cent, for example, that impacts on another company's [prospects]."

Pattison added that loss-making companies are not set for much of a brighter future in 2013.

"We are always surprised at how resilient loss-making companies are, but none can do this permanently. While it is not uncommon to make a loss, sustaining it or returning from it is getting harder – costs can only be reduced so much, so it is not easy."