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‘Expert’ camera buyers a challenge for retailers

The latest Canon CDLI report prepared in partnership with GfK, confirms falling prices have hit the CE lifestyle products segment in retailing hard, but digital imaging has shown more resilience than most other categories.

A key finding in the digital imaging category is that ‘imaging experienced’ consumers are now demanding high quality cameras that more specifically suit their needs.

‘The research shows that people don’t want a cheap product, they want a quality one. With the continuing consumer focus on enhancing the lifestyle experience through quality and advanced functionality, how we help consumers achieve their lifestyle objectives is the critical opportunity,’ said Jason McLean, director, Canon Consumer Imaging, Canon Australia”

‘Images are a central driver of the integrated lifestyle and we’re now taking 65 percent more photos than we were just four years ago. We’re enjoying them in many ways including viewing on our HD TVs, producing large prints and sharing in social media, but we’re now also seeing strong growth in storage devices to archive our lives.’

‘How we’re using technology is changing and the industry will need to keep pace with changing consumer expectations if we are to continue to satisfy demand,’ said Mr McLean.

Overall volume sales performance remained strong in the second half of 2010, with six out of the 13 CDLI categories posting an increase (second half of 2010 versus second half of 2009) and five out of these six categories recording double digit volume growth.

PVRs and PCs led the way, with unit growth of 25 percent and 24 percent, respectively. They were followed closely by LCD TVs (+18 percent) and Digital Still Cameras (+14 percent).

Given household penetration of cameras is already around 80 percent (which in effect is close to saturation point), this augurs well for ongoing replacement sales.

The total sales value of Australian digital lifestyle products experienced the most significant decline ever recorded in the 8-year history of the Canon CDLI report. Total value reduced by 13.3 percent, from $4.11 billion in second half of 2009, to $3.57 billion in second half of 2010. Only PCs actually grew in value. The report makes the point that ‘internet sales did not account for this decline, ‘since they were estimated to be a consistent and a small proportion (5 percent or less) of the markets which experienced the greatest declines.’

(However, it has to be assumed – given relatively low freight costs and the success of businesses such as Digital Camera Warehouse, that internet sales did cut more significantly into the overall ‘bricks and mortar’ sales of digital cameras.)

Compared with second half of 2009, DSLR cameras increased in volume by 51 percent, and also managed to post double digit value growth (17 percent).

Digital cameras were upgraded faster than ever, with 26 percent of purchasers in the second half of 2010 replacing their old cameras within two years (up 6 percent from 2009).

The growth of digital devices and their usage has led to the expansion of data storage requirements, with one third of PC buyers attaching an external hard drive to back-up and supplement their PC’s internal storage, allowing consumers to save more of their digital content, such as the growing numbers of photos they are taking.

The report identified a definite ‘flight to quality’ in many categories, including digital cameras. ‘Price’ as a criterion for purchase of a digital camera has fallen by 12 percent, with ‘specifications/features’ up 5 percent, and ‘technology type’ (ie, whether the camera should be a compact or DSLR) up 7 percent. Quality was rated by 84 percent of recent camera buyers as a ‘Very Important’ or ‘Extremely Important’ motivator for purchase – nearly double the proportion of buyers who rated low price as important.

Perhaps price has become a lesser consideration because cameras now represent such excellent value: Seventy-one percent of camera buyers in the second half of 2010 spent less than they had actually budgeted for; 18 percent saving as much as $100 or more on what they had expected to pay.

Photography remained a significant driver of engagement with ‘the digital lifestyle’, and Australians are taking more photos than ever before. In second half of 2010, the average number of photos taken per month increased by 5 percent compared with second half of 2009, and Australians are now taking 65 percent more photos compared to when the Canon CDLI first began reporting on these figures in 2007.

More and more people want to ensure they have the latest technology on-hand to capture significant personal life moments, such as travelling and holidays, with 81 percent of camera purchases and 63 percent of all camcorder purchases being event-driven.

Digital cameras have also been identified as common gift purchases. Over the last 2 years, 18 percent of cameras were bought as gifts, and in December, 2010 this grew to 37 percent, highlighting the extent to which cameras are ending up under the Christmas tree.

The Canon CDLI report refers to a ‘perfect storm’ of retail opportunity, with the key factors being:

1. High product demand
2. Lower average prices
3. Ongoing product innovation
4. A consumer buying mentality that is seeking higher quality and functionality more than the lowest price

‘Consumers can benefit from the development of innovative products which enhance the digital lifestyle at more affordable prices, and the industry can benefit from healthier sales of more advanced and higher-end products – especially in those categories where quality is a leading purchase driver, and where there have been significant leaps in product innovation and/or functionality,’ the report stated.

Sound product knowledge and selling skills are becoming more critical in digital camera sales. If consumers are sold products that do not match their needs, they will be less satisfied with their experience and also much less likely to become advocates.

Compact digital camera buyers were more likely to definitely recommend their product if they purchased a camera at the higher end of the market (54 percent to 68 percent, for $200+ cameras) than the lower end (42 percent or less, for cameras less than $200).

This correlation between recommendation and premium high-performance devices will only be exaggerated as the market becomes more and more comprised of experienced buyers who have owned digital products before and are now seeking the digital lifestyle experience through enhanced quality and functionality, rather than simply low prices.

For the full report, click here.

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