First small domestic appliances sales slump in five years

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Newly released data from GfK South Africa shows that electrical heating experienced the biggest decline in value, followed by irons. On a more positive note, revenue for SDA in June 2017 was up 5% compared to the same month in 2016, which may bode well for December, which is generally the biggest month for appliance sales.

Brick and mortar outlets enjoy the lion’s share of the market, accounting for 74% of total SDA revenue. This indicates that South African consumers prefer to touch and, in some cases, test the device before they purchase. However, GfK expects that more SDA products will be sold online as internet penetration increases and consumers become more comfortable with e-commerce. This trend is already unfolding in categories such as books and music.

External factors affecting market

GfK believes that the downgrade of South Africa’s sovereign credit rating, the technical recession and political uncertainty may suppress consumer spending through 2017. Affordable trade brands are expected to grow market share at the expense of pricier multinational brands.

Premium brands are likely to experience a knock in sales as consumers start to shop around for better value for money. The slowdown in demand is expected to negatively affect revenue going forward, unless brands are able to adapt their strategies to a changing market.

As wallet share skews towards food and other necessities, consumers are expected to prolong the life span of their domestic appliances, in turn decreasing demand for SDAs.

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2017 consumer trends

The growing trend in South Africa of ‘healthy eating and living’, influenced by healthy eating TV shows, may spur more demand for food preparation appliances, especially liquidisers and juicers.

A culture of drinking high-quality coffee is rising in South Africa, which could translate into robust demand for good espresso machines, especially as consumers opt to dine in and entertain at home because of their shrinking disposable income.

Nikolay Dolgov, GM point of sales tracking at GfK South Africa, says, “Against the backdrop of challenging market conditions, retailers and manufactures need to adopt new pricing strategies and create value-creating promotions that help consumers to save money. Access to accurate point of sales data can enable brands to continuously monitor market developments and forecast trends, so that they can make smart decisions about promotions, pricing and marketing in order to build a sustainable competitive advantage.”