Results of GfK TEMAX® Australia for quarter 2, 2014
Sydney, August 21st, 2014 – The Australian Technical Consumer Goods (TCG) market recorded a revenue decline of -3.2% for quarter 2, 2014. The growth of the Information Technology sector was not sufficient to balance the decline of Telecoms, Consumer Electronics and Small Appliances.
It was a tough quarter for parts of the Australian economy and following an austerity-focused federal budget, consumer confidence dropped to new lows. Interest rates remained level but inflation and unemployment was on the rise.
Though the Australian TCG market was in overall decline, there were pockets of solid growth. Information Technology (IT) continued its recent positive trend, led by a recovery in mobile computing and wireless connectivity devices, while Major Domestic Appliances (MDA) stabilised after a couple of consecutive periods of value decline.
Information Technology: Recovery, fuelled by mobile PCs and Wi-Fi
The IT sector continued to grow in quarter 2, showing a 2% value growth compared to the same period last year. The majority of segments within IT showed strong signs of recovery; most recording value growth.
After a long period of value decline, mobile computing, the largest category within IT, was flat year-on-year. With sales of mobile computing playing an important role in the sales of computer peripherals, this recovery is likely to have a positive impact on the IT sector as a whole.
One key IT segment to show growth in quarter 2 was wireless range ex-tenders. Typically used to boost Wi-Fi signal at home, strong sales of these products indicate an increasing usage and focus on Wi-Fi within Australian homes.
Major Domestic Appliances: Popularity of feature-rich products
After two consecutive periods of value decline, the MDA sector stabilised in the latest quarter. Higher-priced, feature-rich products added value to the MDA sector, with value growth surpassing volume growth during the quarter.
Within the dryers market, heat pumps and condenser heating models were catalysts for growth. With an average price four times that of standard dryers, the demand for heat pump dryers had a very positive impact overall.
Another area of note within MDA was the rangehoods segment. Canopy/cartridge rangehoods grew significantly in quarter 2, 2014, accounting for nearly a fifth of the spend on this segment.
Telecommunications: Challenges as smartphones slip into decline
Quarter 2, 2014, was a challenging quarter for the Telecoms sector, with smartphones recording their second ever value decline.
The trend towards outright purchases continued in the second quarter. In fact, for the first time ever, the sales for smartphones purchased outright, or without any carrier attachment, outsold those purchased on prepay.
Bigger screens also continued to gain popularity. Focusing specifically on new smartphones launched in the quarter, nearly 90% of sales were generated from models with a screen size of 5” or larger.
Consumer Electronics: Large screen demand continues
The value of the TV market continued its recovery in quarter 2. A slew of new ranges were released that were heavily focused on super-large screens, with a wide range of UHD/4K models (and a few curved) seeing strong initial sales. This continued shift towards premium TVs fueled an overall average price increase. The average price for TVs reached its highest quarterly figure since quarter 3 2010.
Interestingly, the impact of the FIFA World Cup – usually an event that generates an uplift in large-screen TV sales – was minimal this year. The significant time difference between Australia and Brazil may have been a factor, but the general dominance of large-screen TV sales in the past year or two would also impact on the ability of the industry to generate incremental sales.
One of the stronger performing segments in recent times has been head-phones. This dynamic segment experienced a significant slow-down in growth in quarter 2, partly due to the plateauing of attachment categories such as smartphones and tablets. A year-on-year decline in the number of models available for sale, after several quarters of strong growth, provides further evidence of a maturing category.
Small Domestic Appliances: Mild winter cools off sales
A relatively mild start to the winter affected the heating-related categories within SDA, as both electrical and gas heaters, as well as electric blankets, all showed a decline on last year.
Vacuum cleaners, the largest category within SDA, did continue to grow, with the higher priced hand-stick and robot sub-segments still driving overall vacuum market growth. Between them, these segments now account for over a third of the vacuum cleaner market.
“Healthy” products are also continuing to drive the SDA sector. Products like low-oil fryers and slow juicers suggest that consumers are willing to pay more than twice the price for kitchen appliances that promote health benefits.
Market likely to remain flat, at best
2014 has already seen periods of recovery for the IT and Consumer Electronics sectors, but any pockets of opportunity have been overshadowed by decline elsewhere.
The performance of the Telecoms sector will play a large part in the overall health of the TCG market in the final quarters of the year. Expectations of a flat Telecoms sector will probably mean a flat performance for the TCG market as a whole.
GfK TEMAX® is an index developed by GfK to track the technical consumer goods markets. The findings are based on surveys carried out on a regular basis by the retail panel of GfK. The retail panel comprises data from over 425,000 retail outlets worldwide. Since February 2009, GfK has also been compiling the GfK TEMAX® index at international level in more than 30 countries. It is the first index that includes all of the markets for technical consumer goods in different countries. All reports and press releases are available at www.gfktemax.com. If information from this press release or www.gfktemax.com is cited, GfK TEMAX® should be explicitly indicated as the source.
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