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Because Information Technology is one of the sectors we specialise in researching, we always keep an eye on the latest news and industry trends. Marketing Magazine has recently published a sector update, which we thought might of interest to some of our readers: These are tough times for PC and laptop retailers. Technological development may mean that manufacturers are constantly introducing products, but pressure on prices has been fierce. As a result, many sellers rely on sales of peripherals and accessories to make a profit. Specialist shops have faced competition on several fronts: online retailers; manufacturers such as Dell selling direct to consumers; and mixed goods retailers, including Tesco and Argos. Spending on PCs was down 8.8% in the first quarter of 2009, according to Mintel, but the fall is expected to be 5.7% for the year, with information-processing equipment sales as whole worth a total of £5.3bn. As well as price deflation, the market has been hit by the wider economic climate, with many shoppers cutting back on unnecessary expenditure or delaying bigger-price purchases. However, with laptops available for as little as £300, the market has been opened up to those who might have been deterred by the cost in previous years. Online retailers have an advantage over bricks-and-mortar stores because they can carry much bigger inventories. In the face of undercutting by generalist stores, specialists must differentiate themselves through their service and expertise. Apple’s stores show how the retail environment can become an experience in itself with the right investment in interiors and staff. PC World, owned by DSGi, dominates the specialist sector and has a market share of about 26% through its 160 stores and website. It has adopted a cross-channel operation and has invested in advertising support, explaining to shoppers that they can buy online and collect in store if they choose. Apple has expanded its retail operation significantly so that, with 24 stores in the UK, it has doubled its market share in the past two years to 5.7%. Dell, the PC manufacturer that broke ranks by selling direct to consumers, has also widened its distribution network, and in 2008 began to sell through third-party retailers such as Tesco and Currys. The arrival of the US market-leading electrical products retailer, Best Buy, into the UK next year is expected to shake up the sector. While it will bring economies of scale, Best Buy’s investment in Carphone Warehouse means it will also have the benefit of the mobile-phone retailer’s customer insight. Mikro Anvika remains the biggest of the independents with 10 stores, most of them in the London area, but its turnover has recently been declining. Notable online stores include Dabs and Ebuyer, but they are not focused solely on computing, also selling other equipment such as cameras. The products offered by retailers affect the market and the introduction of netbooks – smaller, stripped-down laptops – has lowered the entry point for consumers. Thus, while these products have offered a boost to the market in terms of volume, they also represent down-trading. Industry estimates put netbook sales at 15% of the market in 2008 and some ISPs have started to give them away as a means of extending their reach. Netbooks are also easier for non-specialist retailers to sell, as their reduced functionality requires less expert knowledge among sales staff. Recovery in this market is going to take some time. It will not be until 2014 that the market will return to near 2008 levels, according to Mintel. Between 2010 and 2014, growth is predicted to be 4.9%, which means that value will reach £5.6bn in 2014. If PC specialists can find a way to address the requirements of the older generation, this growing demographic may help their position.
Home and recreational goods sales by value (£m)
Source: National Statistics/Mintel
Types of computer bought by price
Base: 2000 internet users aged 16+, June 2009 Source: GMI/Mintel
Computer retailers by sales and number of outlets
To find out more about our I.T. market research capabilities, please click here. This entry was posted on Monday, January 11th, 2010 at 10:06 am and is filed under Business, Industry News, Information Technology, Retail. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Leave a Reply |
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