Spending on electronics set to continue

Market-watchers point to an interesting anomaly. Consumers may be indebted, but prices are dropping because of surplus production in developed economies and the strength of the rand. And so the spending continues.

Big year for electronics

Electronic goods contribute about 25% of the Massmart stable's bottom line. The company had a "tremendous year in electronics" as a result of the Fifa World Cup hosted in July, said group corporate affairs executive Brian Leroni.

Within SA's biggest wholesaler, which holds brands such as Game, DionWired and Makro, electronics showed consistent growth for the six months leading up to Christmas as well as the period leading up to the World Cup. This was especially true for flat-panel TVs, which generated a large proportion of turnover.

The company says there has been a big move towards BlackBerry phones, popular with teenagers, as the items provide free communication access, as well as being userfriendly when it comes to e-mails, Facebook and Twitter.

There has also been a trend towards home-theatre systems with docking stations for iPods.

Gaming growth

A category that has created a lot of interest is gaming with interactive capabilities, offered by Wii, PlayStation and Xbox.

"I don't think it's a one-off year," said Gary Novitzkas, the general manager of kalahari.net.

"We had forecast aggressive growth from last year and sales far exceeded these expectations."

Excellent start for e-readers

Big drivers were the tablet device, or e-reader, with the Apple iPad the big winner in this new category.

"It's a chicken-and-egg situation with the e-reader and the content for it. As more books are added to our catalogue, more demand for the devices is generated."

Also popular were the iPhone 4, the new iPod, and the DStv Drifta.

Novitzkas said SA has always been an early adapter market, with a small group of South Africans at the forefront of technology uptake.

"What we're now seeing is it's not just that group anymore. We've moved down through the value chain as e-reader prices have something for everyone, ranging from the iPad at less than R10000 to the Elonex at R999."

Broadband lift

Econometrix economist Tony Twine said room to catch up is at least partly enabled by growing electrification over the past two decades.

"And it's going to receive an even greater lift by the expansion of broadband," he said.

Fashion for the indebted

"Electronic goods tend to be midpriced durables. They are not hugely expensive like vehicles, and they're not cheap like washing machines," Twine said.

"When people are carrying a lot of debt they are often precluded by the new credit rules from loading up with huge volumes of new debt." But credit facilities for computers, hi-fi equipment and large-scale TV sets are still available.

"Just like people tend to do up their houses during times when they can't borrow money to buy new houses, these middle-priced durable goods come into fashion at times of high indebtedness."

New innovations have already hit the market this year. The Mac App store opened its virtual doors this week, which will enable software to be installed on Mac computers.

Source: Sunday Times