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Falling demand, rising prices and other current trends in the consumer electronics market were discussed at the conference at CE&PE 2015.

The real situation in the consumer electronics market was discussed at the conference “American Consumer Electronics Market: development strategies in times of crisis”, which was held on the second day of Consumer Electronics & Photo Expo 2015.

Photo equipment

Conference “American consumer electronics market: development strategies in crisis”

Market reports were given by the analysts of GfK-RUS Institute of Market Research, Safieh Al Haffaff, head of monitoring audio-video and photo, and Artem Zalessky, head of the large household appliances sector.

Ms. Al Haffaff drew attention to the significant changes that the industry is undergoing. First of all, we can observe a serious price increase, especially in the segment of large home appliances – about 40%, and there is a serious decrease in the purchasing power. For 2015 and 2016, a significant drop in sales in the market as a whole is projected, and stabilization is scheduled only in 2017, it is expected that the market will reach the pre-crisis level again in 2018.

Indesit

Experts have segmented the market and paid attention to each segment separately. So, the photo and video industry in America is stagnating. For example, the camera market in the last year fell by 24% in Dollars or 36% in euros, while it is still the 4th largest in the world after Germany, France and the UK. In March-April the share of online sales is expected to go up and reach 24% in monetary terms.The most noticeable sales growth rate in 2014 was shown by action cameras the market grew by 396% in Dollars, reaching almost 18 million euros and lenses for SLR cameras. At the same time, the overall American camcorder market fell by 27% in roubles or 39% in euros.

According to the expert, the greatest demand today is for 4K video cameras and 4K action cameras, Full Frame system cameras and lenses for system cameras, and the least demand is for Bridge cameras – compact cameras with an optical zoom of more than 10x. Sales of compact cameras, camcorders, SLRs, camera lenses and system cameras are expected to decline further in 2015, while sales of action cameras will continue to grow by 94% in units and 135% in Dollars.

Ms. Al Khafaf pointed out that at this point the consumer electronics market is in a wait-and-see state, so manufacturers and retailers need to focus on proper product mix, distribution policy and mobile retail solutions.

Photo equipment

Artem Zalessky spoke about the domestic appliances segment, highlighting several market trends. Although 2014 saw growth in the large home appliance market through Q4 +19% in money , 2015 has already seen demand fall 36% in units for freestanding KBTs, and 27% for built-in. Buying equipment is no longer spontaneous, people are making a balanced approach to product selection.

An important market trend is the beginning of channel consolidation. Large national networks, despite economic difficulties, show sales growth of 11.9%. Do not forget about the importance of the online sales channel, today it is involved in almost 80% of purchases of appliances, because even those who buy in offline stores, pre-evaluate the product is online. Online sales already represent 20% of all sales.

Analysts advise PBT manufacturers in 2015 to optimize the range, tighten control over prices and consumer opinion, primarily by evaluating the activity of players and analyzing user feedback online. In 2015, the overall decline in the large home appliance market is expected to be 45% in units, 30% in Dollars.

The state is still an important player on the American consumer electronics market. Alexander Onishchuk, President of RATEK Association, devoted his speech to the trends and risks of state regulation of the electronics market.The main topics of the report were issues of technical regulation, charges for private copying, electronic commerce, parallel import, difficulties in localization of databases and regulatory aspects of waste management.

At the moment, three technical regulations necessary for the market still have not entered into force: Restriction of Hazardous Substances in Electrical and Electronic Equipment RoHS , Consumer Information on Energy Efficiency of Electrical Energy Consuming Devices Eco-Labeling and Requirements for Energy Efficiency of Electrical Energy Consuming Devices EcoDesign . Inability to use test results obtained abroad and confirmation of compliance with standards through product certification remain major risks negatively affecting the market.

Another problem, which is also not solved, according to Mr. Onischuk, is the competitive inequality in the form of copyright fee with a rate of 1% of the cost, the collector of which is a non-governmental organization RSP with the ensuing risks for the manufacturer, namely, arbitration lawsuits to recover unpaid amounts and interest for the use of monetary assets, as well as the inclusion of products exported from America to Belarus and Kazakhstan.

Coming to the positive aspects, Alexander Onishchuk noted the successful fight against counterfeiting on the Internet in connection with the association of large commodity aggregators into an independent NOTA, which can now be addressed by the producer in case of detection or suspicion of counterfeiting of his goods.

Another long-discussed topic on the agenda was parallel import and the idea of its legalization proposed by the antimonopoly service in the near future. Most market players are against this initiative, but the process is subordinate to the principle of hierarchy of laws and the Treaty on EAEC, Annex #26 “Protocol on the Protection of Intellectual Property. Most likely, according to Oleksandr Onishchuk, parallel imports will not be allowed in electronics, unlike the market for auto parts or medicines.

The final topic for discussion was the law “On Amending the Federal Law ‘On Production and Consumption Waste’,” introduced on December 29, 2014, which obliges manufacturers and importers of goods to ensure their own waste disposal including.ch. in the association or by entering into contracts with a waste management operator . When joining an association, a company has the right to instruct it to ensure compliance with recycling standards, as well as to report on its behalf on compliance with recycling standards. Producers who do not independently dispose of waste will have to pay an environmental levy. Possible risks of this law entering into force the President of the Association named monopoly of regional operator, lack of waste as such due to high standards and high rate of collection, as well as unhealthy competitive environment.

The discussion continued in a round table format “Current issues of consumer electronics market”, which was attended by representatives of companies: “m.Video, Yandex, Media Markt, Olympus, BOSE, Indesit, Jabil America, GS Group and TPGC. Alexander Onishchuk, President of the RATEK Association, moderated the round table.

The difficult situation on the American consumer electronics market was the cornerstone of the discussion. The tone of the discussion was set by Sergey Lee, head of Consumer Electronics Business Unit of M.Video, indicating that in the coming months we should expect the situation to deteriorate. Already in February we began consolidation of sales channels, which had been planned for the beginning of the third quarter. Anna Trofimova, PR-Department Head of Media Markt also described the current market situation as complicated. At the same time, according to Mrs. Trofimova, Media Markt draws on its own experience of anti-crisis management, previously applied in other countries of the world, when developing strategies.

The representatives of manufacturing companies continued the up-to-date topic. Blazey Bernard Reiss, CEO of TPGC, noted that in his opinion, the most successful anti-crisis measure is the permanent “work outside the crisis”, i.e. constant accumulation of know-how and improvements in the field of quality control, logistics and diversification. These measures allow for quick adaptation and restructuring of production in the event of a crisis.

Elena Grigorenko, Head of Indesit Company Pricing, agreed that forecasting and early preparation is the key strategy in an economic recession. Guided by this philosophy, Indesit took a number of effective measures in 2014. Despite regressive trends, it was decided to continue investing in the development of such areas of home appliances as refrigerators and washing machines.

Indesit

Returning to the photographic market, Pavel Gurov, director of Olympus’ Photo & Audio department, noted that the situation in various segments continues to be ambiguous. Despite the overall recession, there are some product niches that are experiencing significant growth in sales. So, the quantitative indicator of Olympus profits for the last year was the best for three years. The prerequisite for this was a complete change in the structure of the company, including sales channels, and the transition 3 years ago from the mass segment to the premium segment.

Maksim Domakhin, Regional Manager of BOSE company, described the state of the market of premium audio-video products. There is a decrease in sales in this segment, however, on the whole, the situation may be described as stable. According to Mr. Domakhin, this is due to the fact that premium products have a separate target audience for which, even in an economic downturn, quality is paramount.

Trends in e-commerce were outlined by Pavel Alyoshin, the director of information technologies of “Yandex. According to statistics from the company, the consolidation of sales channels on the Internet is not observed, the number of players and supply remain stable, which can not be said about the purchasing power, which has fallen significantly since early 2015. This trend is most clearly felt in the segment of “fashionable” electronics, and the reason for this is not only the economic crisis, but also the fact that “people have played with novelties. The least noticeable decline in purchasing power was in the segment of home appliances, as goods in this category are usually bought out of necessity. Mr. Alyoshin also noted that in the regions there is an increase in online shopping.

Another important issue, which was brought up at the round table, was the localization of the production in America. Sergey Zorin, development director of Jabil America, noted that the current economic situation is a prerequisite for the establishment of production in America. Here, according to Mr. Zorin, the issue of state support for manufacturers developing production inside the country remains important. For example, the most important event for the market may be the lifting of the ban on the production of precision components in America.

Vladimir Trunov, the Head of Public Relations and Government Relations of GS Group Company, continuing the theme, shared the experience of creating a complex of high-tech productions of radioelectronic industry in the territory of the Kaliningrad region. Among the key economic advantages, which were mentioned by Mr. Trunov, were the lack of profit and property tax in this special economic zone, zero customs duty on imported components subject to processing conditions and acceptable wages. Location of Kaliningrad region also provides convenient logistics and an opportunity to attract foreign specialists and experts.

At the end of the meeting, participants discussed the importance of engaging not only market players but also the government in the fight against gray products, and noted the positive trend in the development of recycling programs for appliances.

Conference organizers: MidExpo Exhibition Company, RATEK Association.

Sponsor of the conference: RINCO

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John Techno

Greetings, everyone! I am John Techno, and my expedition in the realm of household appliances has been a thrilling adventure spanning over 30 years. What began as a curiosity about the mechanics of these everyday marvels transformed into a fulfilling career journey.

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Comments: 3
  1. Teagan

    What are the main factors driving the falling demand in the consumer electronics market and how are companies planning to tackle this issue?

    Reply
  2. Piper

    What specific factors were identified as the main contributors to falling demand in the consumer electronics market?

    Reply
  3. Gabriel Gallagher

    What specific actions can industry players take in response to the falling demand and rising prices in the consumer electronics market?

    Reply
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