SVI Magazine

It was doom and gloom at the Retra conference in April when our friends at GfK took to the stage at the end of day one and gave it to us like it is (now I know why they call it the graveyard shift!). Those of you who were there will know how brilliantly Nigel Catlow presents the statistics, interspersed with his masterful northern wit, but there was no getting away from the figures on the screen.

The consumer confidence index is down at -28, which is a 14 point decline year on year and the total sales of consumer electronics are showing a 10.4% decline from Jan 2010 to Jan 2011. And this follows a 7.3% decline the previous year! Nigel went on to say that for only four months in the last 33 months has there been any reported growth in CE sales. If that wasn’t enough, to rub salt into our wounds, we’re now lumped in with Greece as the only country in Europe that is showing decline in flat panel sales. There is a predicted decline from 9.5-million TVs sold in 2010 to 8.5-million in 2011. The reason being (and I’m guessing that this is not the same reason for Greece’s decline) is that an early adopter market, such as the UK, is now in the second stage of flat panel purchase. They’re no longer CRT replacements, but upgrades – 45-million flat panels have been sold in the UK and so it’s largely only going to be the early adopters of the next big thing (Full HD, 3D, Internet TV etc.) who are buying now.

The next morning David Buik, city analyst from BGC Partners, gave us a very interesting potted history of how and why the credit crunch crisis happened. Following the stats the previous night, this one really cemented just how serious the downturn was (is). The sort of numbers David was talking about were in the hundreds of billions of dollars, which a) were staggering and b) put our difficulties into a bit of perspective.

The IT crowd

But it isn’t as dire as it sounds, there are opportunities out there and some of the stats point the way to the areas we could benefit from as independents. Large screen TV sales, those above 43-inch, have actually shown a staggering 39% increase in value over the past three months. 3D TV is expected to rise from 125,000 units in 2010 to 560,000 in 2011 and the 50-inch market will grow from 2.3-million to 2.7-million units. As specialist independents, it is these two categories that are most likely to appeal to us and our customers, so that’s a bit of good news.

On the TV front, the digital switchover is still happening and this gives us a real opportunity to sell flat panels, PVRs and the like. The historic switchovers show that the purchase of new TVs and receiving equipment in the switchover region peaked in the nine weeks before the switchover took place. It seems that despite the big budget promotional campaign, consumers are leaving it to the last minute to make their purchases. So, positioning yourself as the local digital switchover experts in that crucial nine week period in your region can only be of benefit.

There are two other areas of interest to us from the statistics, the first being the rise of IT as a proportion of CE sales and the other the changing retail landscape and share of business the supermarkets are doing ‘v’ the independents.
With the convergence of home entertainment and IT become ever more real, it is interesting to see that the supermarkets are now doing 28% of their CE business in IT. By way of a comparison, the independents are at 6%. Now, of course, that includes all the cheap laptops that Tesco and the like are selling and that’s a market that we surely don’t want to get into. But, we should be embracing the rise of the server, streamer and networked solutions and learning all about it from training courses like BADA’s Netcraft.

Secondly, the shift in consumer purchasing habits and their channels of choice. In 1990 there were approximately 5500 independent electrical retailers operating in the UK (this figure includes brown goods, white goods and specialists). By 2010, just 20 years later, this had dropped to 2990. That’s a 46% decline. In the same period the supermarkets doubled their share of CE and the Internet is now heading for around 17% of the UK CE market. The good news, from a Hi-Fi perspective, is that 44% of audio sales are still through specialists – that’s all audio, from iPods through to high end separates. We know from the statistics that GfK has previously presented at BADA meetings, that the Internet only accounts for around 5% of what we would consider to be quality audio sales, so at the moment there’s not too much to worry about there.

Optimist Prime

To recap what we’ve been told, and here’s the silver lining I promised you, if you sift through these statistics there are several clear avenues that you can use to your advantage:

1) Early adopters are buying flat panels with the latest technology, despite the 1-million projected decline in overall volumes for 2011.

2) The size of TVs that we as specialists tend to sell (50-inch and up) are projected to show a 17% or 400,000 unit rise in sales.

3) 3DTV, prime fodder for the early adopters, is set to rise by 348% or 435,000 units.

4) Digital switchover is very much still happening and so if your business is in the UTV, STV Central, Tyne Tees, Yorkshire, Central, Anglia, London, or Meridian TV regions, then the nine weeks before the switch is thrown should be good for business.

5) All these potential TV sales present great added value sale opportunities in terms of home cinema, racks, mounts and cables etc.

6) Convergence presents a great chance to shine as the local experts in all things networkable, just make sure your knowledge is there by attending Netcraft.

Knowing the market is essential for any business if it is to identify trends and opportunities. All BADA members get the chance to see the statistics from GfK twice a year, at the winter and summer meetings. And the complimentary membership of Retra given to all BADA members opens up the wider CE industry figures presented at the conference. Two very good reasons to join BADA, the industry’s trade association.

http://www.bada.co.uk