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CDLI: Lower prices, flat sales – partial picture?

The latest Canon Consumer Digital Lifestyle Index (Canon CDLI), released by Canon in partnership with GfK Retail and Technology, indicates that the spend with local retailers d on digital lifestyle products has fallen by almost half a billion dollars in the past year (down to $2.8 billion), while the actual number of products purchased has remained approximately the same.

The half-yearly reports funded by Canon and prepared by GfK are now more valuable than ever, as there is currently no other industry-funded research which is shared with the broader business community. And like any regular report of this kind, the length of the study increases its value over time.

BELOW: Does the dramatic fall in consumer spending illustrated here only reflect the state of the economy – or also mask a loss of sales offshore?

This represents a 14 percent drop in average selling price overall from First Half 2010 to First Half 2011. While there has been fairly dramatic falls in average selling price in some categories, particularly TVs, the spend on digital cameras has held up pretty well, with a fall of just 9 percent. The number of digital cameras sold by local retailers remained roughly the same.

The fall in the dollar value of sales by local retailers from 2010 to 2011 continues a trend which started in 2009. Over the two years the decline has been over $600 million – or something approaching 20 percent.

‘…are sales volumes static, as it’s claimed the CDLI report shows, or increasing, with dollars going offshore or to non-participating local online retailers?’

‘The latest results show that, despite reportedly low consumer sentiment for the period, strong consumer demand for technology saw volume sales keep pace with the record numbers achieved in first-half 2009, when a raft of stimulus funds hit the market,’ said Jason McLean, director – Canon Consumer Imaging,

‘The strong volume numbers show that for consumer technology, Australian retail is alive and well and consumers are taking advantage of the competitive pricing, deals and support to be found in their local stores,’ said Mr McLean. ‘We expect the Australian market to continue to adjust as strong local competition and global forces play out heading into Christmas.’

Following LCD TVs at number one, digital cameras are the second-most-popular category in the Index, despite being a mature category with more than 80 percent household penetration. DSLR cameras in particular come in for special mention as one of the rare categories in which demand actually grew, with 18 percent more DSLRs sold in First Half 2011 than First Half 2010.

Upgrades continue to play a major role in camera retailing, accounting for 44 percent of camera purchases. The primary motivation for upgrading a camera is ‘better quality’.

BELOW: ASPs for cameras (third from right) have held up well compared to most product categories.

Online elephant in room

The stability in the number of products acquired by Australian consumers in 2011, combined with the 14.3 percent decline in the value achieved in the most recent period, suggests two things, according to Canon: ‘consumers have benefitted from significantly lower average selling prices, and the lower prices have in turn helped maintain the demand for products.’

More speculatively, it could be suggested that the entry of the online-offshore channel as an alternative source, at a time when the exchange rate is extraordinarily high in historic terms, has played a part in driving down those prices.

‘They’ve given us a very useful snapshot…but there’s a finger over part of the lens!’

To have falling sales because consumers are not buying is one kind of marketing challenge. To be losing sales because consumers are buying elsewhere (ie, offshore) is a different one. Retailers – indeed the entire industry – needs to know which challenge they are facing.

Unfortunately, its hard to know which is the case. GfK makes no secret of the fact it doesn’t measure much in the way of online sales:

‘GfK’s retail audit panel methodology excludes sales via manufacturers’ websites, auction websites and purchases by consumers while travelling overseas,’ reads the CDLI fine print, and this begs an important question:

– Anything sold by the plethora of Ebay stores out of Hong Kong, Singapore and locally are not measured, nor sales from retailers like B&H, or even most Australian-based online retailers. So overall, are sales volumes static, as it’s claimned the CDLI report shows, or more likely to be increasing, with dollars going offshore or to non-participating local online retailers?

This would particularly be the case with easy-to-freight, relatively low-dollar-value, high-price-differential purchases like digital cameras.

This is not to question the accuracy or worth of the data GfK and Canon are presenting. They’ve given us a very useful snapshot – more essential than ever now that PICA and PMA no longer fund industry research – but there’s a finger over part of the of the lens!

Camera category stays strong(ish)

Camcorder volumes, which now include multimedia (Flip-type) cameras , declined by 9000 units (or 6 percent) in 1H 2011, but the dollar value plummeted by 26 percent (to $360). Digital cameras, which now exclude multimedia cameras, held on better, managing a smaller than average decrease of just 7000 units (only 1 percent) while average digital camera prices dropped by 9 percent (to $256).

Canon attributed this to the continuing shift towards digital SLR cameras and, in compact cameras, consumers taking advantage of high-end features such as optical zoom, optical image stabilisation and improved sensor performance.

While as noted GfK data gathering and the Canon CDLI does not measure online sales adequately, there is valuable information on how consumers are using online sources to research purchases:

As photo retailers will be aware, consumers are increasingly equipping themselves with more information prior to the purchase process, with the internet accounting for 26 percent ‘of the most influential information sources’ in the both the digital camera and PC buying process.

Retailer websites have become more influential, and ‘online word of mouth’ sites such as forums and enthusiasts’ websites have increased in importance, with 44 percent of camera shoppers visiting online photography-related websites during the purchase process.

But as noted before, when it comes to hard data about online purchasing, the Canon CDLI falls short. All it can reveal is that 57 percent of consumers reported ‘using their computers for online shopping’ (compared to 51 percent only 6 months earlier).

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