As far as discretionary electrical retail sales go in Australia, in particular the Television sector, it is no secret that the current climate we are presented with has drastically changed the landscape for most operators. In days gone by, the latest “must have” technology had customers pouring into their local retailers concerned first and foremost with owning the latest model with all the bells and whistles, and price was a secondary concern.
Unfortunately, over recent years there has been no real “must have” technology release in the television sector. So therefore, it has basically become a race to the bottom on price. The result is retailers such as WOW and Retravision going into administration, Dick Smith store closures, and Mr Harvey raving and ranting on public television on a weekly basis. It’s just not sustainable.
With a heavy focus onto Smart TV, there is the potential for upcoming releases from manufacturers such as Apple and Google to drive the next upgrade cycle. The key to whether or not this will make a difference is not only the hardware itself, but the level of content available, and most importantly, the way it is consumed.
Can the Television sector return to market growth?
Prior to this season the price war between bricks and mortar retailers and online vendors, as well as each other, coupled with the strength of the Aussie dollar has resulted in heavy price deflation of TVs. This has coincided with one of the toughest economic climates on record, which naturally causes reluctance to purchase discretionary items such as TVs, unless absolutely necessary. And even if the customer “needs” to buy a TV, purchasing habits have really changed from the past. Online vendors, available with the flick of a Smartphone, and prolonged price comparison has given customers expectation that they will find that product cheaper at the next stop. So not only are retailers seeing less and less customers walk through the door, when they do come in the price of the TV sold ends up being so low that the margins are the slimmest they have ever been. It takes no genius to conclude that less sales with lower margins is not sustainable. Just ask WOW and Retravision.
So what will happen next?
Analysis points toward continued contraction of volume in terms of units over the coming years, and this reflects the increase in penetration rate. Rewind a few years, and many households still had a CRT screen, or possibly a single older model Plasma or LCD screen. The growth potential of TVs was huge – as they became more affordable and accessible most households upgraded or added a second or third TV in the kids room or spare room. Today, there simply aren’t that many households that haven’t upgraded, so the sheer volume that TVs were sold at in that peak growth period is never likely to be repeated. The flipside, however, is that there is likely to be a shift towards the premium, higher tier product – which will be driven by the next technology change led by Apple and Google.
The increase in the number of televisions sold has not been enough to absorb the price deflation – resulting in overall category value decline.
Looking ahead, analysts predict a strong potential for the Television category to cease it’s decline, and even show some small growth. The missing piece of the puzzle is innovation. A strong, compelling reason for households who already have one to three Flat Screen Digital TVs to want to purchase a replacement set. 3D and LED certainly offered something different from the norm, and while some took to the idea it definitely wasn’t a technology that consumers could do without.
Out with the old, in with the new…
what is needed for the television sector to flourish is a new, sexy must have technology, providing the same excitement levels as when flat TVs that you could hang on your wall were available to replace your big, bulky CRT. A “real” reason for consumers to spend money. That innovation will come from Apple’s iTV, along with the upgrade of Smart TV with new improved, desirable content, and the impending arrival of OLED. Let’s not forget that this is also an Olympic year, and history does show a spike in sales around that time. This, quite obviously, will only give a short burst of sales but a welcome one nonetheless. best iptv provider