Technical consumer goods market: Difficult start

The Telecommunication (Telco) sector experienced positive single digit growth with respect to the first quarter of 2012, showing a solid 7.5% increase. All other sectors surveyed in GfK TEMAX Western Europe declined, most notably Consumer Electronics (CE) and Photo, which experienced double digit drops.

Telecommunication: Smartphones are still winners

With a sales volume increase of 7.5%, the Western European Telco sector achieved the strongest growth of all sectors within the GfK TEMAX in Q1 2012. Telco sales amounted to nearly €5.3bn in this period. With the exception of Portugal and the UK, developments in all countries mostly showed double digit growth. Again, it is the smartphone that is showing the highest growth rates within the Telco sector. Besides the latest top models, there are more and more mid-range products, equipped with excellent feature sets as well. Ultimately, this means higher value for money. The share of smartphones with a display size of more than 4 inches is increasing dramatically, as well as those with camera resolutions of more than 5 Mega Pixels and HD video recording. Cashless payment via Near Field Communication is preparing the market for a new range of services and applications. Thus, GfK expects a continuing demand for smartphones on a high level.

Major domestic appliances: Energy efficiency with increasing importance

Overall, the Major Domestic Appliances (MDA) sector in Western Europe registered sales of €7.8bn in the first quarter of 2012, which corresponds to a slight decline of 1.3% in comparison to the year before. Austria, Belgium, France and above all, Germany produced single-digit growth.

The introduction of the new European energy label, empowering consumers to detect highly efficient appliances on the spot, provides the expected positive impact for the market. This is particularly evident with respect to Austria and Germany, where energy efficiency is a very important selling point.
Already 45% of the Western European washing machines (front loaders) turnover is generated by appliances with an energy class better than A+. The share in Germany stands at a remarkable 60% and in Austria at 50%.

However, energy efficiency also plays an important role in other product segments. More than half of the sales volume of cooling appliances comes with "no frost" features. Across all the countries surveyed in GfK TEMAX Western Europe, the sales for dishwashers in the first quarter of 2012 showed a distinct trend towards water-efficient appliances. This trend can be observed both in the freestanding and built-in sector.

Information technology: Rising prices beat down the demand

The IT sector generated a slight drop of 1.9% in Q1 2012, corresponding to a sales volume of €14.1bn. Austria, the Netherlands and the UK achieved positive growth rates between January and March.

However, demand among Western Europe consumers was partly suffering from increasing prices. An additional reason for the sales drop is the lack of innovations in the mobile and desktop computer segment. Potential for further growth lies in the area of ultrabooks or in new segments such as specific keyboards, bags or ergonomic equipment for tablets. However, these growing segments will probably not be able to revitalise the IT markets in total. Nevertheless, GfK expects the IT sector to show a slight increase in second half-year, because investments in IT will often be shifted to the end of the year 2012.

Small domestic appliances: Mixed development on country level

Western European consumers spent a total of €3.6bn on Small Domestic Appliances (SDA) in Q1 2012. This corresponds to a sales drop of 2.1%, compared with Q1 2011. On a country level, developments were varied again showing a clear north-south decline. The Austrian, Belgian, Dutch, UK and French markets witnessed stable value growth. On the other hand the markets of Spain, Portugal and Greece continued to decrease with double-digits. Germany closed slightly below the previous year.

Despite significant positive impulses coming from robotic vacuum cleaners and kitchen machines, the total SDA sector failed to reach the previous year's sales level in Q1 2012. The main reason was the negative performance of cylinder vacuum cleaners, men's shavers, straighteners and espresso pump portioned closed machines. What is remarkable is that the latter segment was one of the key growth drivers in 2011.

Office equipment and consumables: Influenced by economic crisis

Total sales of the Western European Office Equipment and Consumables sector amounted to €4.0bn in the first quarter of 2012; this is a quarter on quarter decrease of 6.3%. All countries surveyed in GfK TEMAX Western Europe decreased in this sector, with the exception of Austria and Belgium. Nevertheless, the extent of declines differs extremely from country to country. Germany witnessed only a slight value decrease of 2%.

The economic crisis in the EU was the main reason for this bad result. This led to negative development for all types and technologies of printing devices (ink and laser, stand alone and MFD). Even laser MFD, which has been a growing segment in recent quarters, could not influence the actual status of Office Equipment and Consumables in a positive way.

Nevertheless, the printer segment continues to offer many ways to achieve good sales. Due to the variety of product types and technologies it will become more and more important for retailers to offer customers not only good service, but also a product range that covers all relevant printing technologies and serves new trends such as mobile printing sufficiently.

Photo: Trend towards high-quality products

Western European Consumers spent less on photo products between January and March 2012 than in the previous year; total sales in Q1 12 amounted to €1.7bn, a drop of 12%.

The decline of digital cameras was the main reason behind this performance; however, the negative trend slowed down at last.

SLR and compact system cameras showed a clear positive trend, while fixed lens cameras suffered from a decrease in terms of value. This indicates that low level and promotional products had a stronger decrease than high end cameras.

Cameras with smaller feature equipment are in stronger competition with smartphones and feature phones. Thus trading up is a necessary consequence in the market of digital cameras in order to generate purchasing incentive.

Consumer electronics: Waiting for the European Football Championships

The Western European CE-market experienced a very difficult Q1 2012. Between January and March, sales amounted to €9.6bn, a decline of almost 17% compared to the previous year. Only the German market could break away with a positive growth rate of 0.6%.

Flat-TV, the most important product segment, is not a real innovative product anymore, unlike Tablet-PCs and smartphones. High household penetration and the missing additional impact of the analogue switch off were the main reasons for the unsatisfactory development. The challenge for retailers and manufacturers is now to communicate new features such as Smart-TV and 3D as truly innovative features. For these segments there is still a big growth potential in all countries surveyed in GfK TEMAX Western Europe.

For Q2 GfK expects a slightly positive development for Flat TV in Western Europe, as the European Football Championships will motivate retailers to introduce special offers.

GfK TEMAX Western Europe: Slight recovery expected for the second half of 2012

Regarding Western Europe, the effects of the ongoing financial and economic crises clearly had a negative influence on the clients' buying behaviour and thus on the development of the TCG market, which remains behind the results of the previous year in Q1 2012. The current debate as to whether the existing rigid policy of savings is the right solution for all countries provides additional uncertainty in the markets, since it has a rather dampening effect on investments and major purchases. GfK expects at least a partial recovery of the Technical Consumer Goods Market in Western Europe for the remainder of the year. In addition to sporadically announced product innovations, this will be mainly down to the upcoming European Football Championships in Poland and Ukraine.

The survey

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 370 000 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.

Source: GfK TEMAX