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Review Edition - IFA International

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NEWS Trends in Consumer

NEWS Trends in Consumer Electronics a Market research company Gfk revealed its most recent findings on the consumer electronics and home appliances industries, released in the build-up to IFA. And the news is good For the global major domestic appliances (MDA) market GfK expects to see total revenues of €166bn in 2016 and a moderate growth of 1%. Built-in appliances in particular are enjoying record sales in Europe. In Western Europe the MDA market increased by 5% both in volume (units sold) and value during the first six months of 2016. This was mainly driven by positive sales trends in the Netherlands (up 8%), France and Sweden (each up 6%). If this trend continues throughout the second half of the year, this market will achieve record sales of nearly €32bn in 2016. Eastern Europe continues to be strong, with an expected growth in the MDA market of 7.5%. If this trend continues, total sales will reach €4.3 billion in 2016. In China the MDA market will remain flat this year, at .5bn. This market – the biggest in the world – is expected to pick up during 2017. In Latin America revenue volume will probably be lower than in the past eight years. This trend is even more evident in local currency. In Brazil, the largest country in the region, this negative trend is particularly marked. RECORD SALES OF BUILT-IN APPLIANCES For the first time, the built-in appliances market has reached 40% of the total MDA, corresponding to an annual revenue of nearly €13bn. With growth of more than 7% in the past 12 months, this market is now out-performing free-standing appliances in Europe – which is up 5%. Cookers and ovens with integrated steam function are among the drivers of growth, with a revenue increase of 34% during the first half of 2016 compared with the previous year’s period. This new segment now accounts for 12% of total sales of built-in ovens. For the overall year GfK expects to see revenues of about €350m. Innovations for hoods, for example hob extractors, have successfully entered the ADM market and show a growth rate of 28%. By value they represent 4% of all sales in Western Europe – about €70m for the year as a whole. THE CONNECTED HOME Innovation plays a big role in the growth of Connected Appliances, with this sector achieving a market share of up to 3% in Europe – about bn annually, and more than 5% in Asia – about bn annually. Smart washing machines and refrigerators are particularly popular, adding an average 50% to the price compared with conventional household TV DEVICES ARE NOT JUST GETTING BIGGER, BUT ALSO OFFER AN INCREASINGLY REALISTIC PICTURE appliances. Eco-friendliness also drives growth: GfK findings show that political regulations to control energy consumption significantly impact the market for domestic appliances. The introduction of energy labels has increased sales of higher classified appliances, and direct or indirect subsidy programmes, for example those in Croatia and Hungary in 2015, have triggered early replacement purchases. GOOD NEWS FOR AUDIO Streaming is a trend in virtually every area of the audio market. Consumers are accessing music files from NAS servers, the cloud, laptops, smartphones or tablets or using increasingly influential online music service providers. Networked and wireless products, as well as soundbars and headphones, also continue to enjoy popularity among consumers. Digital radios are stimulating additional growth. Following the strong upswing of in-ear Bluetooth models in 2015, the Bluetooth headband segment showed stronger growth again in the first half of 2016, with sales revenues up 85%. The Bluetooth in-ear models also continued to prosper, with a 39% growth in sales revenue. And there are other innovations waiting in the wings, including necklaces and neckbands as well as wireless models with two separate earpieces – and even “earables” - wearables for the ear. In 2015 sales of compact systems and smart audio products comprised 18.7 million devices worldwide, while in 2016 that number is expected to drop 6%. However, multi-room and streaming are revitalising the market, gradually changing the way consumers acquire and listen to music. In Europe, sales revenue of smart audio products (multi-room- enabled systems) rose by 26% in the first half of 2016. With compact systems, the trend is moving towards networked and streaming-enabled systems. In total, the sales revenue volume in Europe reached €563m in 2015. 10

NEWS nd Home Appliances at IFA 2016 Despite the good development of connected compact systems, the overall European market saw a slight decrease in sales revenue of 5% in the first half of 2016. All streaming-ready segments combined constituted a demand volume in Europe of approximately 18 million sales in 2015. With a share of over 80%, Bluetooth is the most popular streaming technology. At the same time, there is also a trend towards wifi-enabled products, which increase the number of possibilities, especially with regard to multi-room systems. In Australia, a total of 1.8 million radios with DAB chips were sold between January and June 2016. This puts the sales of digital radios 9% higher than the previous year, representing 15% of the total radio market. GROWTH FOR MOBILE Worldwide, 667 million smartphones were sold between January and June 2016. Following a rise of 7% in the first half of 2015, the number of smartphones sold in the first half of 2016 increased again by 6.2%. Revenue in the global smartphone market also increased by 4.5% in the first six months compared with the previous year. The growth markets China, Central and Eastern Europe, Middle East and Africa, Latin America as well as emerging APAC lead the way here with an increase in sales on 9.7%. In contrast, demand in Western industrialised countries fell slightly due to extensive market saturation, dropping by 1.9%. Consumer demand for classic mobile phones was also down in the first half of the year by 14%. This means that the overall number of mobile devices sold worldwide was the same as in the first six months of 2015. Wearables are helping to drive the mobile market – with positive growth in the first half of 2016. GfK predicts global sales of 122 million units for 2016 and expects to see a global market volume in this sector of .3bn. This corresponds to a growth of .8bn compared with the previous year. GfK trade panel figures for the first half year also show that wrist-mounted technology is becoming increasingly well established in Western Europe. Currently, one in ten consumers who buy a smartphone also purchase a wearable. In total 5.5 million devices were sold, around 1.2 million of which were in Germany. This corresponds to a growth rate of 75% in Western Europe and 54% in Germany. Smartphones with a large display of 5” and above are especially popular – in the first half of 2016, 424 million were sold worldwide. This represents a share of 64% of all smartphones sold, or a growth in share of 47 percentage points compared with REGULATIONS TO CONTROL ENERGY CONSUMPTION IMPACT THE MARKET FOR DOMESTIC APPLIANCES the same period in the previous year. The share of 4G-enabled devices in the overall market also continues to rise. In the first half of 2015, 56 percent of smartphones were equipped with 4G technology. In the first half of 2016 this figure had risen to 79 percent. In total, 519 million 4G-enabled devices were sold between January and June 2016. The global market has benefited from the stable price level of smartphones. On average the nonsubsidised price of smartphones in the first half of 2016 was €272. TVS GET BIGGER AND BETTER This year, TV devices are not just getting bigger, but also offer an increasingly realistic picture. More colours and brightness settings, better contrast and the perfect black are the trends currently dominating the TV market. GfK expects to see growth in all of these segments. The TV market is being boosted by Ultra-HD (4k) TVs in particular – TV screens with a resolution four times greater than that of a Full-HD TV. Worldwide, sales of ultra-HD devices rose in the first half of 2016 to 20.8 million (first half of 2015: 11.0 million). This represents an increase of 89%. Ultra-HD TVs are particularly high in demand in China, where 9.6 million devices were sold in this segment, representing a share of 40.6%. China has a 22.7% share of the global TV market. In Europe, sales of ultra-HD devices rose to 4.1 million in the first half of 2016, up from 1.6 million in the same period last year. Revenues almost doubled at €4.1bn. The stronger growth in volume in this category is accompanied by lower average prices. Furthermore, the ever-increasing availability of devices in size classes of 40” and more is making it easier for consumers to find the right device. The global share of smart devices, in other words of internet-enabled televisions with access to app stores, is also continuing to rise. In the first half of 2016, 42% of all TV models sold worldwide were smart, compared with 39% in the same period last year. Devices in this category now make up 56.8% of total revenue IFA International • Friday 16 th September 2016 11

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