Continued Decline in OZ CE Spend
- Units shift, but at lower prices
- Storage category increases
- Aussie dollar takes some of the blame
Research company, Gfk, has announced its latest results on the consumer electronics industry, which isn’t looking too flash, according to the report.
This quarter saw the third consecutive quarterly year-on-year decline in the value of the Australian technical consumer goods industry. The 5.5 percent decline has been exacerbated by the continuing strength of the Australian dollar, at close to parity with the US dollar.
None of the sectors measured escaped the trend of declining average prices. Consumer electronics was hit the hardest, leading to an overall value decline for the sector of 18 percent.
After its first-ever recorded value decline in quarter 2, 2010, the notebook PC category bounced back to a 9 percent growth in quarter 3; despite the growth this category was experiencing in the same quarter of 2009. Desktop PCs also grew in value, by 16 percent, and the ever-growing storage category did not disappoint, with a growth of 24 percent. There is now almost one external storage device sold, for every PC sold.
These growth rates mask a significant year-on-year decline in average price: 20 percent for notebook PCs, and 17 percent for storage. However, since the initial fall in average prices for notebook PCs, back in December 2009 (a few months after the rise of the Australian dollar), average prices for this dominant category have remained fairly steady.
The consumer electronics sector is dominated by the flat panel TV market, accounting for just over 60 percent of all value sales. Previously, strong unit sales have, to a certain extent, balanced out the significant price deflation within this category. However, with unit growth beginning to slow (40 percent in quarter 2; 19 percent in quarter 3), and the erosion of average prices accelerating at the premium LED and 3D TV end of the market, value spend simply cannot be maintained, resulting in a quarter 3 decline of 19 percent. Add to this the unit and average price decline of almost all other significant categories within this sector, and the result is an overall sector decline of 18 percent.
Looking more closely at flat panel TVs, it is noteworthy that 3D TV accounted for 11 percent of value sales in quarter 3 (up from 6 percetn in quarter 2). Interest in the segment is being fuelled by increased brand competition, heavy advertising and promotional campaigns, TV screenings of high-profile sporting events and broader availability of 3D content.
A flurry of recent competition in the smartphones market has seen a rise in the touch-only phone design, from 47 percent in quarter 3, 2009, to 66 percent of all mobile phones sold in the most recent quarter. It has also resulted in declines in average prices, with the smartphones year on year price decline sitting at 25 percent, and the price of mobile phones halving.
Previously, the growth of the higher-end smartphones has outweighed the decline in standard mobile phones. However, this quarter, combined unit sales showed an overall increase of 4 percent, while combined value sales across the two categories showed a decline of 4 percent. This is despite a 62 percent increase in spend on smartphones.
It’s unlikely that value growth will return to the majority of these sectors in the coming quarter. The growth period of quarter 4, 2009, was characterised by heavy promotional activity, particularly within high-end flat panel TVs, and unseasonably warm weather, leading to high spend on cooling products.