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Day 6 - IFA International

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Market & Technology News

Market & Technology News European market for small domestic appliances records positive figures The European market for small domestic appliances has recorded positive figures for the first six months of this year. In Western Europe, sales increased by 6% in comparison to the previous year, while Eastern Europe saw growth of as much as 7% according to the latest findings from GfK's Retail and Technology 's retail panel. Dynamic markets, innovative products and an altered retail landscape have reshaped the market for small domestic appliances in Western Europe. One constant in these times of change has been the solid year-on-year growth achieved in the six major Western European countries of Germany, Spain, France, the UK, Italy and the Netherlands. Sales (in €uro) for the first half of 2010 stand 6% above the value for the prior year and each individual country has also recorded a significant increase. Vacuum cleaners are in first place, with almost half of the total sales growth attributable to this product group. Food preparation appliances, coffee and espresso machines, men’s GfK Retail Technology shavers and epilators are also providing significant stimulus. The market for small domestic appliances has proven to be virtually totally resistant to the effects of the economic and financial crisis, with the huge variety of products and providers compensating for declines in some areas. An additional factor is the innovative strength of manufacturers, which the retail sector has supported with a high level of commitment. In numerous product groups, it has also been apparent that although many consumers are not necessarily making purchases more frequently, they are spending more on new acquisitions. High grade features and the quality of the purchased Small Domestic Appliances by Product Group GfK Market Estimation World 2009 Food preparation 15% Source GfK Beverage 17% Cooking 10% Irons 9% Total: 33,1 Bill. € model are often the deciding factors. With a 2% increase in units sold and a 9% rise in sales revenue, the considerable growth in the vacuum cleaner product category is continuing this year. In the most important segment – cylinder vacuum cleaners – high-quality bagless appliances in particular have experienced growth. In general, a preference for branded products and trading-up are the observable trends among consumers.In addition, the market is being boosted by the significant rise in demand for robotic vacuum cleaners, which now constitute 3% of total sales, and handstick vacuum cleaners, whose growth is primarily attributable to new products and Vacuum Cleaners 25% Personal Care 24% competitors in the rechargeable handstick segment. Coffee and espresso machines providing positive stimulus For several years, the market for coffee and espresso machines has been a vital growth segment among small domestic appliances in Europe, recording steady, and at times double-digit, growth. The market is characterized by innovative products, and consumers who are showing acceptance of these developments, altering their drinking habits as a result. New appliances for preparing coffee, such as pad and capsule machines, have enjoyed major popularity, but the traditional filter coffee machine segment has also been able to maintain its level. Total sales in Western Europe increased by 4% in the first half of 2010 and volume sales growth stands at 2%. This is attributable to the rising demand among consumers for higher quality appliances in the espresso segment. The highest level of growth has been recorded for espresso capsule machines, which saw an 18% increase in sales volume. Consumers are showing great interest in “single serve solutions”, which allow one cup of coffee or espresso to be quickly and easily prepared. For also sales of coffee pad machines have recorded growth of 5%, whereas the segment of fully automatic machines has seen a decline of 6%. Following years of stagnation, men’s shavers, has seen growth for both the upper end of the entrylevel price products and the premium products. Highquality products are also in demand for epilators. The trend in the hair removal products segment is towards ever-more flexible appliances. Increased demand has also been recorded for the product groups of beard trimmers, precision groomers and body groomers. Hairstyling appliances have been the most dynamic category for several years. New product ideas, such as combining curling tongs with straighteners and ionic brushes, are making sustained progress on this market. The trend is moving away from products that only straighten hair towards models which enable a more flexible styling. Overall, sales revenue has risen by 7% in the six major Eastern European countries, while volume sales figures have again stabilized following the crisis-driven losses in the previous year. After considerable declines in sales last year, Ukraine and Slovakia in particular have returned to positive growth rates. Sales in Hungary and Romania declined in the first half of 2010, but on a monthly comparison a slight recovery is evident. Contrary to this trend, the market in the Czech Republic remains negative and in neighboring Poland, which was hardly affected by the crisis last year, the market for small domestic appliances is now experiencing a delayed decline. Across individual product groups in Eastern Europe, sales increases have again been recorded for devices from the segments of food preparation appliances, coffee and espresso machines, kettles and vacuum cleaners. 12

Market & Technology News Mobile communications market continues to expand Voice-centric and Data-centric handsets driving robust growth The mobile communications market is recovering all around the world. According to GfK's over the first six months of the current year, sales of mobile phones, in particular, increased considerably in emerging and developing countries, while products relating to mobile internet were the growth drivers in western industrialized nations. Total sales of mobile phones and smartphones climbed by 6% in Europe. In emerging and developing countries, voice-centric mobile phones play the greatest role in this upward trend. Sales are rapidly recovering following the downturn as a result of the economic and financial crisis. Growth of 28% has been experienced in the Latin American countries of Brazil, Argentina and Chile, 27% in Sub-Saharan African countries and 19% in South- East Asia. Demand for mobile phones has risen by 12% in India, while China (including Taiwan and Hong Kong) has experienced a rise of 11%. These are important sales markets for manufacturers intending to increase their global market share. In contrast, sales of mobile phones in Europe and the Middle East/North African region stand at minus 2% and so remain below the previous year’s level, which was already comparatively low. However, as a result of good infrastructure, the main focus in western industrialized nations is on products with open operating systems (smartphones) for mobile data transmission (data-centric phones). Smartphones are now a standard feature of the business world. However, private users are also becoming more interested in the multitude of flexible applications and mobile access to social networking sites and are therefore increasingly choosing smartphones. In Europe sales of smartphones are booming with an increase of 52%. At 20%, smartphones have a higher share here than in any other region; however, the share of smartphones in the Middle East/North African region and South East Asia also already amounts to 19% and 14% respectively. There is major potential for growth in China (including Taiwan and Hong Kong), where sales of smartphones currently total 14%, Sub- Saharan African countries (8%) and India (4%). Regional and international network operators will invest in expanding the infrastructure in these countries over the coming years and consequently drive sales forward. The trend on the mobile communications market is moving towards open operating systems. Android can now be found on more and more smartphones, both in the USA and elsewhere. New software such as Bada, Brew and MeeGo will be joining established systems including GfK Retail Technology the iPhone OS, Windows Mobile, Blackberry OS, Symbian and Palm WEBOS. In addition to that, several manufacturers have announced the release of new versions for the second half of the year. It is to be expected that open operating systems will also expand to other product categories such as webpads and e-readers. Following a decline of 13% last year, the German market for mobile phones has been able to recover by 5% in the first half of 2010. This growth is attributable to sales of both contract and SIM-free mobile phones. SIM-free refers to sales where the customer independently combines a SIM card with a separate mobile phone. Customers frequently opt for discount tarifvfs and network operators respond by also offering discount lines. In contrast, sales of pay as you go packages are in decline. The trend towards mobile internet is evident in several product categories in Germany. The sales increase for smartphones in Germany currently stands at 59%. In June, one in four mobile phones sold was a smartphone. USB sticks for mobile data communication In 2010* PCs, Mobile and TVs will continue to expand more generaly the 3 displays are covering almost 70% of the turnover Source GfK €588 Billion €591 Billion €556 Billion €582 Billion 26% 25% 25% 26% 12% 14% 16% 17% 11% 9% 8% 8% 12% 13% 15% 16% 3% 3% 3% 3% 36% 37% 34% 31% 2007 2208 2009 2010* * Forecast Market share by product groups in the word in euro MOBILE PHONE Mobile Computer DESK COMPUTER LCD PLASMA-DISPLAY are also recording rapid growth. Around 1.1 million sticks linked to providers were sold over the first six months of the year, with approximately half being pay as you go or contract models. The products on offer increasingly include unlimited downloads. Internet-based data storage, known as “cloud computing”, will also play a more important role for smartphones in future, and the network infrastructure for new technologies that enable a higher transmission rate will also be further expanded. IFA International • Wednesday, 8 th September 2010 13

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