Polish ICT distribution market to return to growth in 2018-2019

The ICT distribution market in Poland is forecast to stabilise this year after the sharp decline seen in 2016, with the combined revenues of the country’s IT distributors expected to be only slightly below last year’s. A distinct recovery can be expected in 2018-2019.

The Polish ICT distribution market was worth 15.3bn in 2016, which represents a drop of 11% compared with the year before, according to estimates in a new report from PMR, “The ICT distribution market in Poland. Market analysis and development forecasts for 2017-2022”. The deterioration in the market observed last year is partly attributable to a step-up in tax inspections targeting the sector. A slump in public procurement also played a role.

Our ICT distribution market value estimates include the combined revenues of the country’s top 20 IT distributors and the estimated combined revenues of smaller market players – excluding exports (and non-IT product sales). If export revenue were to be taken into account, then the 2016 market value would rise to almost PLN 21bn. This means that exports represent more than 25% of the total revenues of ICT distributors in Poland.

A new survey by PMR* shows that IT distributors consider strong market competition and low margins to be the main trends shaping the IT distribution market in Poland at the moment. A third of our interviewees also pointed to distributors diversifying into non-IT products as a notable trend. Indeed, the country’s Big Three IT distributors now also distribute audio-visual equipment, white goods, toys, or electrical tools. The share of non-IT products in the sector’s total revenue remains relatively low, however – it was a single-digit figure in 2016.

According to a new set of forecasts from PMR covering the period 2017-2022, the ICT distribution market in Poland will decline again in 2017, but only marginally, and the market   is poised to return to growth in 2018-2019 and the subsequent years, supported by a recovery in public procurement and an improving consumer market. Distributors, though, will continue to pursue product and/or geographical diversification in order to minimise exposure to risks such as public procurement market weakness, tax inspections, or macroeconomic deterioration, broadening their product portfolios beyond ICT products and consumer electronics and/or increasing export sales or expanding beyond the Central and Eastern Europe region, etc.

 

* The survey was carried out in June 2017 and interviewed the 103 largest IT companies in Poland, 60 of whom defined themselves as IT distributors. The table shows the opinions of the distributors.