The Sector Faces A Tsunami In Demand In Autumn



With stocks that have not just normalized and with saturated logistics chains worldwide, it is not clear that the sector can cope with the avalanche of equipment orders expected from an education sector that faces an atypical and uncertain course. Some of the wholesalers that are most played in the coming months tell us

The declaration of the state of alarm and the harsh confinement that followed led to a significant upturn in technology sales in Spain. In the second half of March and the first weeks of April, wholesalers could not supply enough to serve laptops and home office equipment. The reason was that millions of employees and students had to start telecommuting and taking classes remotely from one day to the next. And for that, they needed equipment and a lot.

In those days, Agustín Sanchez, CEO of Depaul, recognized that he was selling more product than on Black Friday. “During March, everything that came out of the manufacturers’ stocks was sold because there was an unbridled race to facilitate teleworking so that all those companies that could take hold of this solution were active remotely as soon as possible”, Pedro Larrosa also acknowledges Marketing Director of Valorista. The figures of consultants such as Context or GfK also confirmed that strong rebound at that time. 

However, at that time there was already a concern in the channel, and it was that in a situation in which world markets were paralyzed by the pandemic and with international communication channels also cut off, no one could guarantee the supply of equipment in the short term. and medium-term. “We are having a lot of material shortage problems. No more printers, webcams, and laptops, especially the low and mid-range models. Also, manufacturers do not have much material either ”, Agustín Sánchez acknowledged at the end of April. In fact, in a few weeks, the Cartagena wholesaler had practically sold the 23,000 laptops it had in its warehouses since the Christmas campaign.

Calm chicha before the storm?

The question is: how is the supply in the channel today and what are the expectations for the coming months? One could say that the outlook is somewhat calm, although problems can reappear at any time. According to Antonio Valiente, head of endpoint solutions at Tech Data, the stock “has not completely normalized”, although the situation is much better than during the hardest drink of confinement. Valiente assures that equipment is available, although, for example, Intel’s chip supply problems persist.

Also, the Tech Data executive fears that the worst is yet to come at the turn of the summer. In his opinion, the demand for equipment in education will hardly be met. At the end of the day, it is a sector that is very much in need of technology because, predictably, some of the time students will have to be at home and take virtual classes the next year. And in that situation are the 8.2 million students in Spain, according to figures from the Ministry of Education, and also many hundreds of millions more around the world.

In fact, in these months the shortage of equipment has already been experienced as an intimate conflict in many families, where parents who telework and children who connected to the institute have disputed laptops and tablets. “The demand from schools and educational authorities around the world is going to be so brutal, and it will not be able to be met. In Spain, the education projects of the autonomous communities are going to be gigantic, and above all, they are going to be based on the purchase of laptops ”, Valiente emphasizes.

We have already seen a sample of what is to come in mid-June when the Pedro Sánchez government approved a program to distribute no less than 500,000 computers and tablets in public educational centers throughout the country, to reduce the digital divide between students and ensure that all students can access classes next year. The program is endowed with a budget of 260 million euros of investment. “The uncertainty of how the school is going to be in the next years will continue to drive demand. While teleworking had begun to be a common practice in companies, with low but existing percentages, the same did not happen with schools, where the implementation of ICT was very low ”, adds Valiente.

Along these lines, at the beginning of June, José Angel Sánchez, Depau’s marketing director, confirmed to CHANNEL PARTNER that the demand for technology remained high because “many families and schools are already preparing a return to the school that will need the same products. that are demanded telework ”. In Depaul, they take for granted that in July sales will fall, for seasonal reasons, but they also trust a rebound as the school year approaches.

Transportation has become more expensive

The strong global demand for educational equipment is joined by another problem that has been affecting all sectors for months. And it is a transport and logistics chains that do not work normally. “When factories in China began to produce after the pandemic stopped, the logistics centers collapsed. And that is why transport prices have risen. There is still time for distribution networks worldwide to normalize ”, explains Antonio Valiente.

As a consequence, it is now more difficult to import technology from Asia, and also more expensive. “The logistics infrastructures are what they are and how many sectors are competing to move their products around the world. It can be said that the logistics capacity in the world right now is exceeded, and that is why prices rise ”, says Valiente, who assures that the cost of air transport has multiplied, and that is a serious problem when manufacturers want to speed up some channels that have been down for months.

“With the confinement, health needs skyrocketed and transport prices multiplied, especially in April and May,” recalls, along the same lines, Eduardo Moreno, general director of MCR. In fact, for Moreno, the pending issue in the sector continues to be that of transportation deadlines, because both production in Chinese factories and stock levels have largely returned to normal. At the turn of the summer, it will be seen if the sector dies of success, due to a demand that it will not be able to satisfy, or the product flow normalizes.

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