Mixed bag for tech consumer goods
The Australian Technical Consumer Goods (TCG) market has levelled off in quarter one (Q1), with overall revenue recording a slight decline of 0.7 per cent compared with Q1 2013 according to GFK’s quarterly TeMax report.
The market, which experienced a value decline of 2.3 per cent in 2013, is showing signs of further stabilisation, as the rate of decline for consumer electronics continues to slow and IT returns to growth.
Australia’s economic results were varied in Q1 2014. Total retail spend, as reported by the RBA, was in growth, though consumer sentiment dropped to its lowest rate since Q4, 2012.
The first quarter of 2014 delivered growth across a range of sectors. Small Domestic Appliances (SDA) and IT recorded value growth of four per cent and three per cent respectively.
In SDA, vacuum cleaners and food preparation drove the increase in value, while for IT, it was continued demand for media tablets.
The rate of growth for these sectors, however, was not strong enough to counter the continued decline in consumer electronics, which fell by six per cent, and a maturing and stable telecom sector is no longer injecting growth into the market.
Small domestic appliances
Vacuum cleaners, the largest category within SDA, was once again the catalyst for growth for the sector.
Robot and hand stick vacuums still performed strongly, although more traditional canister and upright vacuums account for the largest value share of the category.
Food preparation also continued to experience growth, thanks to the popularity of the liquidisers segment. Smaller on the go and soup maker liquidisers are particularly in demand. This reflects a common theme for SDA, which is the consumer focus on health and lifestyle products.
This is also evident by the growth of low oil fryers, despite the significant price premium they command.
After experiencing tough market conditions throughout 2013, the IT sector has bounced back in Q1 2014, growing by three per cent in value.
Media tablets were again the leading force. With double digit value growth, Q1, 2014, had a stronger year on year performance than the previous 3 quarters.
Average prices also rebounded, with Q1 recording an average price growth for the first time in over a year.
In mobile computing, the rate of decline slowed dramatically this quarter. In fact, the latter part of the quarter actually experienced very modest growth. This is positive news after such a long period of value decline.
Smartphones back in growth
After a value decline in Q4, 2013, the first in many years, the telecoms sector returned to growth this quarter, albeit a modest rise of 1.6 per cent.
The increased share of premium priced phones was a key factor, with the market average price increasing strongly during the quarter.
Premium phones have brought a range of high end features into the market. The majority of phones purchased in Q1 came with 4G connection, allowing for faster delivery of data.
Bigger screens were also more prevalent, as a quarter of all phones purchased had a screen that was five inches or larger.
Major domestics decline
The major domestic appliance (MDA) sector experienced a slow down in Q1, recording its second successive quarter of value decline.
This comes as no surprise for such a stable market, where periods of growth are almost always followed by periods of decline.
These negative results at the sector level disguise some strong pockets of growth.
Both the cooking and dishwasher segments performed well, helped by a shift towards higher priced, premium products. Of particular note within cooking was a shift towards pyrolytic ovens and induction hobs, both of which command a price premium.
After a very strong 2013, the MDA sector will face a big challenge in 2014 to remain in growth. MDA products are characterised by long lifecycles, and are somewhat limited by household numbers. Continuous, long term periods of growth are therefore difficult to achieve.
The decline in consumer electronics has continued, though the rate has slowed considerably, from regular double digit decline during the past couple of years, to a six per cent decline.
Market volumes of TVs (by far the most dominant segment within this sector) softened, but the demand for super large screens remained strong, with a third of all TVs purchased in Q1 50 inches or above.
While still in its early stages, with most of the major players’ 2014 models yet to enter the market, 4K/UHD is another area to show strong revenue growth.
Within the audio sector, devices that dock wirelessly, predominantly via Bluetooth, continue to perform well, accounting for half of audio generated revenue.
The increased number of brands and styles on offer, coupled with the increase in mobile device penetration have fuelled the popularity of this segment.
Positive start to the year
The beginning of 2014 has provided reason for cautious optimism, following a further stabilisation of the consumer electronic and IT sectors.
Despite this, challenges do still abound with tough macro-economic conditions, the release of an austerity themed federal economic budget, and the maturing of the previously high growth telecoms sector.
The consumer technical goods market is likely to remain flat for much of 2014.