UK leads consumer electronics spending

The UK has retained its crown as the largest market for consumer electronics in Western Europe, despite suffering from an 11 per cent drop in market value during the first half of 2008, according to figures from GfK and GFU.

Britain accounted for 22 per cent of the market, but Germany caught up, representing 21 per cent, boosted in part by its success in Euro 2008.

Figures from GfK show that the three largest markets, mobile phones, televisions and consumer PCs all saw rapid growth, at 14 per cent, 11 per cent and ten per cent growth respectively.

It predicted that spending in the overall worldwide market would grow by nine per cent during the rest of 2008 to €462bn (£371.5bn), while Western Europe would account for €46bn (£37bn) in sales.

Part of this growth has been put down to the relatively high price of oil, with Philips’ chief executive Hans–Joachim Kamp stating at this year’s IFA that "[the market] will see a cocooning effect" because of the cost as more people choose to spend on consumer electronics instead of going on holiday.

He added that price erosion had made it possible for everyone to upgrade, creating a major untapped potential within the market for continued expansion and growth.

However, over in the US, where the North American RetailVision event is taking place, NPD has warned that many key products are reaching saturation point, with few consumers seeing much point in upgrading.

Citing the DVD and printers as examples, senior analysis vice president at NPD said that they had both reached saturation levels of 85 per cent in the US.

Other markets he referred to were desktop PCs (84 per cent), MP3 players (50 per cent), flat screen televisions (53 per cent) and laptops (48 per cent).

Worryingly for specialist consumer electronics retailers, the Consumer Electronics Association added that it is seeing increasing numbers of retailers who don’t have a traditional presence in the market making inroads.

Brands such as Ikea, Starbucks, Bed, Bath and Beyond and Home Depot were all mentioned by consumers when asked which non-traditional retailers they would consider buying products such as televisions, computers and other products from.

"Electronics have become so pervasive that consumers are looking to buy these devices wherever they want," said CEA research senior director, Tim Herbert adding, "No [retailer] is safe. If you don’t reinvent yourself, there are retailers looking to capitalize on the vulnerability of CE retailers."

Despite the concerns, many of the retailers at RetailVision were optimistic when looking towards the American-retail phenomenon of Black Friday, with many telling CRN US that they are anticipating a bumper year, regardless of economic worries.

"[We’re expecting our] biggest ever Black Friday," president of American retailer Datavision Computer Video, Albert Liniado said, adding that he was expecting a large upswing in demand for products like LCD televisions, GPS units, mobile phones, Bluetooth earpieces and memory during the fourth quarter.

He also said that he was anticipating much of the demand to be web-based. "Retail is now driving the Web. We’re going to see a big fourth quarter increase on the Internet."

His point was echoed by fellow US retailer Overstock. Director of merchandising computers and electronics, Andrei Kibrik said: "The fourth quarter is definitely the biggest part of the year for online."

The only stumbling block he said that could hold back consumer spending was the US presidential election, due to take place in November, but he was confident that once a new president had been elected, spending would increase, boosted in part by the feel good feeling a new leader.