Consumer spend unshaken at Christmas: Results of GfK TEMAX® Australia for quarter 4, 2009

Encouraging figures on the continued fall in unemployment, down to a seasonally adjusted 5.5% in December, coupled with positive news on the global financial situation helped to ease fears and keep the till bells ringing throughout the festive season.

Considerable promotional activity and unseasonably warm weather were both major contributors to the growth at the end of 2009. On average, the industry managed to rise to the challenge and surpass last year’s sales results even though last Christmas had the advantage of benefiting from the first wave of government stimulus packages.

Notebook price cuts boost IT market

Sustained high sales of notebook PCs propelled the consumer IT sector to a value 20% higher than quarter 4 2008. This rise consolidated its healthy performance in the previous 3 quarters resulting in a full calendar year increase in revenue of 24% over 2008.

The launch of Windows 7 at the start of the quarter, together with reduced average prices and the growing demand for all things digital, were major contributors to this upward trend. Leading retailers helped to promote this push by opening stores at midnight on the day of launch.

Competitive retail promotions resulted in the overall notebook average sales price dropping to under $1000 dollars for the first time in Australia. The lower prices partnered with ever improving technical specifications caused a substantial increase in sales volume, resulting in the considerable financial gains that were seen in this sector.

No cooling-off for appliance sales

Small appliances performed extremely well in 2009, with most categories experiencing increased sales in the lead up to Christmas. Compared to quarter 3, the value of the market segment rose by 20%, contributing to year on year growth of 14%. Most of the power behind this phenomenal growth came from the cooling appliances sector.

November was an exceptionally warm month, with both NSW and VIC breaking the record for the highest mean temperature anomaly ever recorded for an Australian state, making this Australia’s hottest November on record. The cooling product markets profited from these extreme temperatures, with air conditioners and electric fans sectors increasing in value by 46% and 61% respectively on last year’s spring/summer quarter.

The value of major appliance purchases declined slightly in quarter 4, down 2% on the previous quarter, with washing machines suffering the brunt of the losses. However, a slight increase in residential building approvals were encouraging, with dishwashers and cooking appliances benefiting with a small increase of 0.7% for the total category over quarter 3.

LCD and plasma promotions drive consumer electronics revenue

While most consumer electronics categories suffered with a downturn of over 10% in sales, the panel TV and set top box sectors performed exceptionally in quarter 4, 2009. These sectors expanded by 17% and 76% respectively compared to the same quarter in 2008.

Growth of LCD & plasma TVs accelerated from quarter 3, 2009, with a 14% increase in value. This was driven predominantly by an intensifying of promotional activity, with all major manufacturers offering high-value, HD-based give-away deals, particularly in October & November. More than 75,000 Blu-ray home theatre systems, DVD recorders, games consoles and bonus TVs were given away during quarter 4, 2009.

An additional factor was the increasingly price aggressive bottom-end of the market that was particularly effective in the few weeks leading up to Christmas. Much of this activity was focused on the small and mid-size LCD screens, which helped the total LCD sector increase its overall share of the panel TV market value to 72%, significantly out-performing the plasma sector.

The affordability of high-end LED-backlit LCD models helped the new technology gain share – the sector accounted for 11% of panel TV revenue in quarter 4 and is set to increase substantially in 2010 as competition intensifies.

Digital imaging

The news was not as positive for digital imaging products, which experienced a 17% value decline compared to quarter 4, 2008. Most of the deficit came from the digital photo frame sector which suffered an annual drop of 34% in spend as average prices were eroded significantly, due to increased volumes of cheaper tertiary-branded products.

Compact digital cameras, which constituted 78% of all digital cameras sold in quarter 4, were also hit hard with a drop of 14% in value

Mobile telecoms value falls

A lacklustre December for the seasonally dominant prepaid mobile handset market vanquished any hope for a happy ending to 2009 for the smart/mobile phone market. The value of the traditional mobile handset market has been in decline throughout the year, but has been buoyed to a large extent by the smartphone sector which accounted for 51% of handset sales by value at the end of the year. However, this wasn’t enough to keep the marketplace from seeing a decline of 8% compared to the same quarter in 2008.

The market continued to polarise throughout quarter 4 2009, with the market divided between the falling low prices in the prepaid sector, and the contractually purchased high end mobile & smartphones where average prices increased from quarter 4 2008.

A mixed outlook

With new technologies becoming more affordable, and promising unemployment figures, there are certainly signs that consumers will continue to grow in confidence and continue their increased levels of spending in the first quarter of 2010.

However, the global economy is still fragile, and another expected rise in interest rates could lead some consumers to defer large purchases to later in the year. Furthermore, a lack of government cash stimulus packages in the first 6 months of the year will impede retailers efforts to create the same growth rates that were seen at the start of 2009.

The survey

GfK TEMAX Australia is an index developed by GfK Retail and Technology to track the consumer durables markets. GfK TEMAX is published internationally. The findings are based on surveys carried out by the retail panel of GfK Retail and Technology. The retail panel comprises data from over 200,000 retail outlets worldwide. All reports and press releases are available at www.gfktemax.com.

When quoting information from this press release or any details published at www.gfktemax.om, please indicate GfK TEMAX expressly as the source.

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