UK distribution market flat in 2025
2025 will be a year of no growth for distributors in UK and Ireland according to the latest market forecast from the Electronic Components Supply Network (ecsn).
This follows a collapse in 2024 with a fall of 19.7% as the result of excess inventory.
“This year we are proceeding with extreme caution. The problem is that it is impossible to understand what is going on with customer demand, There is so much stock in the supply chain, so much inhouse inventory in distributors and in stock at customers and as finished equipment. Price pressure is emerging and the market will decline in the first half of 2025. There are so many factors at work,” said Aubrey Dunsford, market analyst for ecsn which represents the majority of authorised distributors. This does not include manufacturers or the grey market.
The market for authorised distributors, which is dominated by semiconductors, is expected to be £1447m, the same as 2024.
“There is still demand and design activity is continuing, so distributors are busy but whether they are getting paid is another issue,” he added. “We think things will slowly improve in 2025, with a mid forecast of 0%. If we come out of 2025 as flat on 2024 it won’t have been a bad year.”
This comes from a falling book to bill ratio with billings back to the same level as 2019 and 2020 during the Covid pandemic. Distributors warned of overstocking back at the end of 2022.
“At the end of 2023 the book to bill appeared to have turned so it was looking like it would pick up, but it didn’t, it hit the bottom in January 2024. This has improved over the year but its still far from growth and the trend line hasn’t gone back above one yet which says there will be no growth in Q1 of 2025,” he said. “It’s going to take virtually all of 2025 to eat the stock that’s out there.”
What this reflects is the impact of non-cancellable orders, says Adam Fletcher, chair of ecsn.
“In the UK we didn’t see the overstocking as we had come out of Brexit as we were already overstocked and had been keeping inventory levels high. But there is 200 days of finished inventory at manufacturers, that’s not including work in progress, and they are pushing their authorised distributors to take that inventory, and then they try to balance that with customers but the visibility has been lost.”
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