Tech goods are in decline, with TVs, appliances and PCs all slumping in Q3
That’s according to a Gfk Temax report out this week which says Technical Consumer Goods revenue in Australia went soft in Q3, due to “a combination of consumer pessimism, market maturity, and a strong Australian dollar” which accelerated the decline.
The value of the tech market slumped 11% to $4.09bn overall, the largest decline since almost 2 years ago (Q4 ’10), with all segments including IT and big appliances taking a “significant” tumble, and consumer electronics being the worst performing sector with TV and smartphone demand all falling.
However, there was one exception – Headphones, which is enjoying a revival of fortunes due to to the inflated attachment base of products like smartphones and tablets.
And even the ever popular smartphone can’t save the electronics industry, as growth of the Telecommunications sector came to an “abrupt end” Gfk Temax report indicated.
However demand for Small Appliances (up 4%) continued to perform against the trend, while IT slumped a massive 12 percent – its first significant decline for many years – as sales of tablets exceeded sales of notebooks for the first time ever.
Demand for big appliances also fell 4%, although there was a trend towards higher-spec (and pricier) products like French door refrigerators released by LG and Panasonic, and higher-capacity washing machines.
The TV market has been in decline since 2009 and is now also contracting in units.
“The decline in units is now so significant, as the market finds its new, ‘natural’ size, that even slight increases in overall average price have very little impact on the value of the segment,” the report shows.
Here’s a breakdown of Technical Consumer Goods categories, courtesy of Gfk.
Small Domestic Appliances: Domestic bliss
Small Domestic Appliances sector has been delivering steady, modest growth throughout 2011 and 2012. Technological and design innovation, coupled with ongoing media interest in the kitchen and household arena, has been successful in attracting consumers to higher-end, higher-value products.
This has contributed to the steady value of the sector as a whole, while many other sectors fall victim to intense price erosion. Star segments within this sector continue to be food preparation products, hot beverage makers and vacuum cleaners, while hair stylers generated this quarter’s highest value growth.
Telecommunications: Smartphones remain flat
Following a relatively brief (Q1 2011 to Q1 2012) but unprecedented period of growth, the value of the segment in Q3 remained flat.
Thanks to the influence of higher-end smartphones, however, value sales continue to exceed units.
Although value was flat, the segment experienced significant, double-digit unit decline in the quarter.
Major Domestic Appliances: Knocked by consumer sentiment
Major Domestic Appliances also suffered this quarter from the consumer propensity to save rather than spend.
The sector suffered a modest 4 percent value decline.
Encouragingly, however, for this increasingly competitive sector, microwave ovens is the only segment to have experienced significant price erosion. The overall average price for all other segments remained steady.
Information Technology: Slump
Since the launch of the GfK TEMAX report in 2008, the IT sector has never before reported double-digit decline. The strong growth of new technology segments (media tablets and touch-screen PCs) continues to be significant, but is not sufficient to compensate for overall declines in average price.
This declining average price is a result of both general price erosion, and more significantly, by the changing struc-ture of the sector: unit sales of media tablets exceeded sales of notebook PCs for the first time in Q3.
But worst of all, turmoil in the tech trade is expected to continue, the Gfk report predicts.
The Australian TCG market is clearly experiencing some exceptional challenges in Q3, causing turmoil among retail sector, marked by store closures and changes in ownership, while the indusry restructures and repositions itself for the uncertain future ahead.
However, trends are unlikely to change significantly during the lead-up to Christmas period, but new model launches like iPad mini and Windows 8 will be optimized in order to maximize consumer spend.