October 2019



A By Paul Hide, techUK s summer fades away, thoughts (and

prayers) across the industry turn to the next three months; a trading period that is critical to the profitability, and possibly survival, of many. Trading conditions are likely to remain challenging. UK GDP contracted for the first time in five years in Q2 of 2019 and consumer confidence levels have remained low since the 2016 Brexit referendum. Overall consumer durables sales remain sluggish with GfK reporting a five per cent decline year-on- year. Whilst core categories such as large screen TV continue to show volume growth, value is declining a little due to price erosion in this segment. The other key factor in our sector is the

continued shift of purchases to online. Online sales continue to show a small overall value growth across the CE categories. GfK reported that in August (not an untypical month) CE sales online were roughly flat, whilst sales in-store fell 15 per cent by value. Automotive was the only consumer durables sector in August that saw sales growth in retail, demonstrating just how challenging the high street and retail park environment is. However, retail is hardly dead yet. Whilst there is a continued shift to online sales, most of the CE value continues to be realised in the retail environment. In Television, for example, 70 per cent of the overall annual market value is realised via retail (GfK), and this percentage share has not changed much in the last three years. Inevitably it is the lower priced, more commoditised product categories that see the greatest shift to online sales. It is worth reminding ourselves that the internet has virtually no share of any form of the

personalised or customised installation sector. Retailers that focus on adding value to devices through networked solutions,

smart home

applications and integrated home entertainment systems are far less likely to lose revenue or margin to an online pure play competitor. Volume trading periods such as Black Friday tend

to favour online sellers and mass merchandisers as the headlines tend to be driven by cut price volume deals on brands and products with wide- ranging appeal. We all know that retailing cannot compete head on with pure play operations as the cost of retailing will always be higher. The challenge for retailers is how to shift focus to sales that add value to the devices required by the customer and provide a personalised service that can only be done on a face-to-face basis. One route to differentiation is to embrace

new technology and market segments before the masses jump on board. In this regard it is worth looking at some of the new technologies that we can expect to start to establish themselves over the coming year. IFA remains the biggest technology trade show

in Europe and, as ever, showcased new innovations that are likely to become mainstream propositions. 8K was a hot topic, and it goes beyond UHD

TVs, seeping into laptops and phone screens. The ecosystem for 8K seems to be moving at a lot quicker pace than 4K, with the Rugby World Cup and Tokyo Olympics to be shot in native 8K. Another trend was the announcements of new

partnerships between manufacturers and the platforms, with Amazon inc orporating Alexa and Fire TV into a huge range of AV devices. In the UK it announced a plan to offer a sub £350 4K HDR TV from JVC.

B sales were

HAPPENED? 33 By Nick Simon,

Client insight Director at GfK

lack Friday 2018 was always going to

be tough. In every year from 2014, there had been an increase in turnover against the previous year but last year was beset by a spate of indifferent political and economic news underlined by negative consumer confidence, not to mention obstacles in the Brexit process. It also didn’t help that media and consumers expressed considerable scepticism about how genuine the deals actually were. In advance of Black Friday last year, weekly already

down on their 2017

equivalents, with many commentators assuming that consumers were keeping their powder dry waiting for genuine bargains on the day, so there was further disappointment when sales were down in Black Friday week itself, to the tune of 2.7 per cent in value and 7.7 per cent in volume. Although Online grew to 61 per cent of the market, having increased steadily from the mere 33 per cent chalked up in 2014, this was largely the result of an in-store decline of seven per cent. When this analysis was split by product sector, the steepest decline in 2018 was for Small Domestic Appliances (nine per cent), with Black Friday stalwarts Vacuum Cleaners and Dental Care both down by more than 20 per cent. Major Appliances and Consumer Electronics

also suffered but to a lesser extent. The latter product family is still dominated by Televisions, which had been another of the surefire success stories of previous Novembers, but even a growth recorded for 60-inch+ TVs couldn’t prevent a -3 per cent outcome for total TVs. Of course, we’d already enjoyed a very strong World Cup fuelled first half performance and this may have hampered significant promotional activity towards the end of the year.

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