Consumer electronics in first-time decline: GfK TEMAX

The absence of government stimulus packages and the effect of four interest rate rises in the past six months, have finally had an impact on technical consumer goods spending.

It won’t come as surprise to CE retailers that compared to the same period last year, when these markets were enjoying double-digit growth, spending in the first quarter of 2010, declined by 1.6%, the first drop recorded since the launch of the GfK TEMAX Australia report in 2008.

Consumer electronics posted a year on year decline of 2.2% this quarter; the first decline since 2008. Bucking the overall trend was the dominant flat panel TV category, with a modest 3% growth.

This value trend disguises the enormous 38% unit growth, indicating that consumers are still benefiting from price competition and attractive promotions.All other consumer electronics categories, however, experienced double-digit decline.

MP3 sales are being impacted by the growth of smartphones with MP3 capability, DVD recorders are being replaced by high definition set-top boxes with in-built hard drives (despite the growth of blu-ray models), audio systems continue their long-term decline, and the value of car navigation continues to suffer from the commoditisation of this market.

Imaging hardware is also in value decline (down 8.5% over the previous quarter), as the matured digital still market moves to a cycle of replacement purchases. Despite the increasing ‘must-have’ nature of technical goods, it is unlikely that spend in quarter 2, 2010, will be able to surpass that of 2009, particularly as retailers continue to battle it out with pricing and promotional activity.

Domestic appliances took the worst hit this quarter, but consumer electronics also failed to deliver growth, according to the latest GfK TEMAX.

Traditional mobile handsets continued their steep decline ( down 45% compared to Q1, 2009), but the 149% growth in spend on smartphones was more than enough to counteract the decrease, resulting in a 3.9% gain for the sector overall. Other categories in addition to laptops and PCs benefiting from technological developments were storage (up 13%), and multi-function printing devices (up 2%).