UK CE spending: Sell digital, says GfK

Chris Forrester

Batten down the hatches seems to be the message for UK consumer electronics distributors and retailers, as market research specialists GfK delivered their latest revenue statistics. After months if not years of steady rises in consumer spending, the past year has been much tougher, and May will see similar trends. But there are still opportunities, says GfK.

This past years decline has provoked an orgy of soul-searching amongst retailers and importers, says GfK, and it warns there may be more bad news to come. One of CE's enduring strengths in the many years' unrelenting growth that preceded the current situation has been the advance of digital technology in most product groups, says GfK. Even twenty years ago we were marvelling at the relatively new CD market, and admiring the Liquid Crystal Display on our remote control handsets.

The real breakthroughs, however, occurred at the end of the 1990s, with the introduction of Digital Video and Audio Broadcasting. As it became clear that our analogue products were facing extinction, manufacturers, retailers and broadcasters set about converting us all. Taken at a superficial level, we appear to have reached a respectable level of ownership of digital TVs, with estimates approaching 90%.

However that still leaves 3 million households which are still only able to watch analogue broadcasts, for a maximum of four more years until switchover is completed at the end of 2012, states GfK. The potential problem will most likely be found in the multi-set homes, where GfKs ConsumerScope panel shows that between a third and one half of households owning more than one TV have at least one analogue TV. We should therefore be able to look forward to significant sales of smaller screen digital TVs over the next few years.

Not for the first time, attention needs to be paid to the recording element of digital broadcasting. Nearly 50 million video recorders have been acquired in the last twenty years, and even though sales have dwindled to negligible volumes, a viable alternative is required.

At the moment this need is being catered for in four and a half million households, but sales of non-subscription digital recorders do not appear to be sufficient to cater for the significant demand that can be expected as more areas switch over by the end of 2009. The 100,000 sales in the first two months of 2009 are just the start of a concerted effort to sell these products over the next few years, not forgetting the 185,000 DVD Recorders with a Digital Tuner sold in the same period. Average prices for both products also held up in the early part of this year at 108 and 195 respectively.