IT retail claims share from B2C sector

Retail is forecast to increasingly dominate IT sales, especially in the home and small office, home office sector, according to the latest report from Gartner.

The report said that most consumers prefer to use retail, as opposed to going direct to suppliers, to make purchases, with brand choice, a wide range of features and price playing a key part.

According to Gartner's figures, the indirect channel accounted for 66.6 per cent of all IT sales in 2004. By 2008, that figure had climbed to 74.3 per cent, thanks to a combination of Dell's move away from a 100 per cent direct model and growth in emerging markets. It is expected to grow to 80 per cent by 2014.

In mature markets, such as the UK, US and Europe, those retailers and resellers with storefronts are the dominant channel for consumer and SOHO PC sales, something that is expected to continue and grow over the next five years.

SMBs are also increasingly geared towards the indirect channel, with majority either using etailers or resellers for their IT procurement: a trend that is expected to continue. Much of the reasoning behind SMBs' shift away from direct sales is due to price, availability, and pre- and post-sales support.

Online retailers are becoming an increasingly important part of the channel mix, according to Gartner. However, while it predicts that etail will be the fastest growing indirect sales channel, it forecasts it will remain a small part at around five per cent of the overall market.

According to research vice president at Gartner, Tiffani Bova, the indirect channel has had a key role to play in the stability of the market over the past couple of years. "The distribution of PCs has always been a complex logistics exercise, and during the last two years, the channel has been particularly volatile with a declining average selling price (ASP), increased channels to market, consolidation and the introduction of new brands and technologies to the market.

"Building a robust and comprehensive GTM (go-to-market) strategy is critical to the overall success of a PC manufacturer. Building a one-size-fits-all product or channel strategy will not deliver the flexibility or responsiveness customers are looking for in today's market."

Bova added that vendors must avoid the temptation to cut costs by going direct. "With predictions of an unprecedented PC market slowdown in 2009, how PC manufacturers keep demand and brand loyalty high will come down to the attention spent on GTM and account coverage initiatives.

"Shoring up partnerships with channel companies (retail, VAR and TSP) and distributors has the ability to provide tremendous competitive advantage. This building of multichannel sales avenues opens up touch points and customer contacts with reduced costs versus selling and supporting customers directly."

Only enterprise, government and education still buy mainly through direct channels.

Tags: Dell, Retail, Channel, distributor, reseller, direct, indirect