retra conference 2016


‘We need the killer app’ This year’s retailer panel featured Aurac Sound & Vision director Graham Russell, Hughes Electrical managing director Robert Hughes, Herbert Todd & Son’s Graham Todd and Clarity Alliance director Phil Hansen. Robert Hughes highlighted Hughes’ Smart Home move. “We saw the opportunity to move away from box selling,” he explained. “Smart Home allows us to add service. We needed that point of differentiation.” Graham Todd has moved into the custom installation market. “We have tried to extend the commercial element into consumer homes, but it has been hard to make money,” he said. “It is building up, so hopefully we’ll extend it to make more profit.” Graham Russell’s Aurac has been doing


custom installation and connected appliances for some time. “It allows us to make more margin on products,” he commented. “In some cases now, the TV sale isn’t important. I’d rather charge for install, accessories, controls for systems. It can be worth more to focus on the services over the product.” Phil Hansen highlighted that the hi-fi industry has seen a “gentle transition” into smart home. “The transition has been gradual in those categories, but it’s hard to get sound systems without Ethernet or Wi-Fi connections now,” he said. “Trends are always started by the geeks and the early adopters, but as the smartphone continues to become the weapon of choice for the general population, it’ll drive into the mainstream.” On the question of manufacturer support, Graham Russell said: “Some are very good with training, some are essentially absent. Some training is too focused on brand ecosystems. We need to learn how to integrate systems with other brands.” Phil agreed that network infrastructure training is key. He said that Clarity and other trade associations need to work together to bring in skillsets to help retailers deliver a seamless proposition to the consumer. Rober added: “Everyone is learning.


Networking issues are hard to solve. There is an element of the bleeding edge to all of this. We wouldn’t expect manufacturers to train us on other systems; we have to learn that.” Graham Russell noted: “If a customer has seen an old system or a badly installed one that doesn’t work like it should, it affects potential sales. The common question we get is, ‘Why do I need this?’ Products need to have real world benefits, then you can sell them.” Robert added: “What is the killer application for these products? We have to keep curiosity in the market, and when we hit that killer app it could bring the whole replacement cycle forward.” Declan Curry took a look at the current business climate, and asked, ‘What has happened since Brexit?’ He noted that despite predictions, there has been no immediate recession, with


October 2016


manufacturing confidence actually increasing, and retail sales and consumer confidence holding relatively strong, as well as growth in the job market with the best employment rate since 2005. However, some of those outcomes were down to the swift movement of the Bank of England to stimulate the economy and work to limit uncertainty. “Businesses are trying to work out how Brexit


will affect them, and it is still too early to work out the economic cost,” Declan explained. “Consequences will only be seen when Brexit actually happens. We still don’t have answers to some critical questions – what happens with tariffs and red tape; do we want to remain in the single market, and if so what price will we pay for that?” Other unknowns include the behaviour of both inward investors and foreign manufacturers. “If the Government wants more outgoing trade, it will have to convince more businesses to look abroad,” he added. However, Declan was optimistic. “We have


to make best of it,” he said. “We have to help build growth in the parts of the country which believed globalisation has passed them by, regions trapped in economies that are low skills/low wages. “Central banks are running out of options to


stimulate economic growth, but could this act as shock therapy to launch UK business out of stagnation? We will continue to be optimistic and make this work.” GfK account director Nick Simon drew on sales figures to demonstrate where the industry is growing and shrinking, with positive news for those focused on domestic appliances. Major domestic appliances (MDA) have


accounted for more than twice the turnover of consumer electronics (CE) this year, with independents taking around a 20% share of that market. In MDA, cooling and washing machines have seen some of the highest volume year on year growth rates. In CE, smart speakers and smart TV have seen minor growth, but overall the share of independents declined in a declining market. In TV, UHD sets have reached 78% of total


sales for 2015 already this year, with more models in the market; however, prices have eroded by 30% between April 2015 and August 2016. GfK’s consumer data has also revealed to what


extent viewing time is now divided between multiple devices, especially in the 18-34 year old bracket (smartphone 13%, tablet 10%, laptop/ PC 28% and TV 49%). The key trends remain capacity, technology and efficiency, and independents’ shares in growing markets are strong. With a pick-up in the housing market likely to lead to a spike in built-in sales and consumers suggesting they expect smart home technology to have a meaningful impact on their life, Nick noted that he would be inclined to be optimistic.


Advanced-television.com contributing editor


Chris Forrester highlighted positivity in the UHD market. By 2025, 800 UHD channels are estimated to be on air, with the BBC “highly likely” for June 2017. While there has been no official confirmation, with the volume of content captured by the BBC in UHD already, and the potential of Wimbledon next year, Chris is optimistic that services will be rolled out. Google industry manager Richard Hartigan traced the expansion and diversification of the business since its formation, and highlighted consumer trends which will affect retailers. The way consumers search has changed, he


revealed, with mobile phones now the most common place people search. People checking reviews and price comparisons are increasingly online and on mobile. He noted that at its launch, 70% of people


searching for the iPhone 7 in the UK did so via mobile, and with prior Apple launches, the patterns tend to be mirrored by searches around Black Friday, highlighting the need for a mobile-first strategy.


‘We, as manufacturers, need independents’ The manufacturer panel focused on service and featured BSH Home Appliances customer services senior manager Karl Ullrich, techUK chief operating officer Paul Hide, Sony UK & Ireland product and user experience quality general manager Mark Billinge and Panasonic NW Europe head of service Gareth Rayworth. The world of repair has changed,


Mark explained, with the migration from mechanical assembly to electronics products making appliances more reliable and stripping out many repairs. However, ‘service’ is much more than repair. “The IoT is upon us, whether we like it or not,”


Mark added. “By 2020, there will be potentially 6 billion connected devices out there. The opportunity for those who understand these interconnections is immense.” Paul commented: “Value added service models come out of complexity, or those that require ongoing support, where there is a need to understand the customer. That is a sector with clear opportunity. “Very few manufacturers own the final part of the sale; that still goes through channels. Most manufacturers see the need for the retail model. I don’t believe that channel part of the process will disappear.” Mark added: “Even if we could own the whole chain, I think we would fail. We can’t cross the threshold to the consumer’s living room. Indies are trusted in that way.” Gareth said: “We don’t have that local


knowledge, you can’t apply national solutions to local level. I think we have an appreciation of what both parties can bring.” Karl noted: “The direct sell infrastructure for


MDA isn’t there. Retailers can deliver, set up, tidy up, then the customer comes back to you. We, as manufacturers, need independents.”


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