Trends & Analysis: Australians not letting -up on IT spend

Trends & Analysis

Following Australia's spending spree on technical consumer goods in Q1 and Q2, the Q3 growth of 4.2% (versus Q3 2008), seems relatively modest, according to the latest GfK TEMAX report.

2008's Q3 sales were unseasonably buoyed by Olympic related purchases, therefore the third quarter's modest growth should be viewed more positively than the figures suggest.

In the first nine months of 2009, Australians spent $13.8 billion on technical consumer goods - an 8.4% growth on 2008.

As the global economy showed signs of improvement, local consumer sentiment continued to increase in Q3, reaching its highest level in almost two years. House prices moved into positive growth in Q2 (announced in Q3), while petrol prices remained flat, and unemployment fell slightly, to 5.7% in September.

Despite these positive economic indicators, Q3 2009 versus Q3 2008 growth of most consumer electronic and household items was pretty flat (1-2%). In contrast, mthere was no let-up in spend on IT goods, with the sector experiencing a 20.8% quarter on quarter growth, largely driven by spend on notebooks.

The growth in IT hardware also had a knock-on effect on consumables, which experienced an overall growth of 8.4%, driven by the growth of cartridges (18.6%).

Technology and connectivity

Despite growth rates of 27% and 39% for Q1 and Q2 respectively for notebooks, the category is by no means  saturated, experiencing another impressive growth in spend of nearly 22% in Q3. July growth was particularly strong, with the continuation of end of financial year sales, and average prices remained steady, due to the demand for higher capacity models.

With personal computers in the home on the rise and the increased use of computers to store digital music, photo, and movies, external hard disk drives experienced impressive growth in spend of over 45% for the quarter.

At an average price of just $177, one terabyte models proved particularly popular. Further reinforcing Australians' love of technology and connectivity, the smartphone market in Q3 was nearing equal value to the traditional mobile handset market.

The value growth of smart phones slightly surpassed the decline of mobile handsets, resulting in an overall growth of 2.3% for the telecoms sector.

Q3 2008 was a particularly strong quarter for the consumer electronics sector, with Olympic-related purchases, made in July and August, driving sales of all things visual.

The impact on Q3, 2009, is that spend on flat panels (over 60% of the total CE segment), declined in July (-5%), but increased significantly in September, by 22%. This market continues to be driven by LCD, while plasma screens experienced some value decline.

The high-end of this category became increasingly competitive in the run-up to the Christmas quarter, with large, full HD models experiencing rapid price erosion, via promotions and cross-category giveaways.

The recent trend of high double-digit growth in set top boxes continued in Q3, with a value increase of 88%. The industry push towards HD is very evident in set top boxes, with HD boxes growing to account for 93% of the total category value. At 50%, growth in PVRs (models with built-in hard disk drives), remains significantly lower than growth of non-PVR models, at 110%.

Growth in Blu-ray players also continued to be evident in Q3, despite the overall quarter-on-quarter decline of the DVD player category (-4%).

An increase in Blu-ray hardware models, software SKUs, and promotional activity, suggests this category will perform more strongly in Q4.

Mixed bag for audio and imaging

In contrast to the visual categories, audio systems, camcorders and car navigation, showed significant declines in Q3. The decline in audio systems was somewhat offset by the growth of mp3s and systems with iPod docking capabilities, whereas camcorders and car navigation simply struggled to maintain their value proposition.

Similarly, within photographic, the impressive value growth of digital SLR was not significant enough to off-set the value decline of compact, resulting in an overall quarter on quarter decline of -2.3% for the segment.

The survey

GfK TEMAX® Australia is an index developed by GfK Retail and Technology to track the consumer durables markets. GfK TEMAX® is published internationally.

The findings are based on surveys carried out by the retail panel of GfK Retail and Technology. The retail panel comprises data from over 200,000 retail outlets worldwide.