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DSLRs buck negative trend

August 18, 2011: The latest GfK Temax Report characterised the 4 percent growth in revenue for Australian technical consumer goods in the second quarter of 2011 as ‘a noteworthy achievement’ in the prevailing economic conditions. DSLR sales are a bright spot in the hard-hit Photo category.

Nonetheless, modest growth in the first half of 2011 has not negated the declines in the last half of last year, so that revenues for the end of financial year for the industry were down 2 percent on the previous year.

‘…positive results in higher margin categories make the story considerably less bleak for photo retailers, and specialists in particular.’

The bright spot overall has been the telecom sector (38 percent), with smartphones overtaking TVs as the top category in value terms.

Consumer electronics delivered a -16 percent decline in value, with the GfK Temax Report noting ‘the rapid rate of price erosion over such an extended period of time within this sector has been staggering.’

The decline in value in the Photo category almost matched consumer electronics, but positive results in higher margin categories make the story considerably less bleak for photo retailers, and specialists in particular, with interchangeable lens cameras a strong driver of accessory sales.

Overall, according to GfK’s Retail Panel, the digital camera market in the second quarter declined by -12 percent in value and -3 percent in units sold., but both both DSLR and mirrorless cameras showed value and unit growth on last year.

In the quarter, over a third of the value of the digital camera market (excluding lenses) was derived from DSLR and mirrorless cameras. This is up from 29 percent in the same quarter in 2010.

The growth in numbers of DSLRs sold is particularly pleasing at +14 percent for the quarter. Mirrorless cameras are also showing strong increases from a small base. One in 10 interchangeable lens cameras purchased in the quarter were mirrorless interchangeable models.

‘Whilst mirrorless cameras account for a small percentage of the market – 2 percent in value of the digital camera market, excluding the price of the lens – they are seeing strong value growth from that smaller base,’ noted GfK account director, Brendan Dowd.

We asked Mr Dowd whether some of the price erosion being seen in digital cameras might be a result of price pressure from offshore online retailers:

‘Whilst there may very well be something in what you say about the pressure from overseas and online retailers, ‘ he said, ‘it is often a combination of factors that affect the price declines.’

According to GfK’s most recent Digital Camera ConsumerScope report, in the first half of 2011, 19 percent of Australian consumers who purchased a DSLR or mirrorless camera within the last six months, did so from either an overseas internet website or overseas retail store. This compares to only 10 percent in the first half of 2010.

Canon’s recently-announced price reductions suggest that local distributors are responding to this new competitive force.

Other key points:

– Two out of three mobile phones purchased are now smartphones, and as the market has matured in 2011, the distribution base has broadened, and models have become available at lower-end price points (sub-$150).
Web-books (tablets) continue to experience phenomenal growth. Web-books with built-in 3G now account for almost two-thirds of models sold, while stand-alone 3G routers have also performed strongly, further illustrating consumer demand for 24/7 connectivity.
– A particularly cold and wet autumn drove consumers in-store to purchase heating products. Air conditioners, electric and gas heaters, and electric blankets all experienced healthy value growth. These high revenue categories accounted for 39 percent of the total value of small domestic appliances in the second quarter, driving the overall sector growth of 8 percent.
– The general trend towards home entertaining has not slowed, with food preparation and hot beverage makers continuing to attract growing consumer spend; both experiencing strong double-digit growth. Along with hair stylers, these categories also proved to be popular mothers’ day purchases.
3D TV is performing strongly, accounting for one in every ten TV purchases, or over a quarter of the value of the market.

GfK’s outlook: ‘In the knowledge that consumer confidence has reportedly fallen further in both July and August, the outlook for quarters 3 and 4 for the Australian technical consumer goods industry is cautious at best. The introduction of new categories and technologies are only just managing to balance-out the effect of falling price points. As these categories become more mainstream, market value will be even harder to maintain.

– We once again thank GfK for its prompt assistance in preparing this story.

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