It’s easy, as a CE retail community, to get caught up in our day-to-day. But now that the holidays and subsequent returns period are both in the books, there’s no better time than now to kick back, relax, and look at the bigger retail picture.
For the Dealerscope team, that bigger picture now involves retail on a global scale. Our partnership with IFA and Messe Berlin has opened our eyes to consumer electronics retailing on a global scale. And while there are many similarities in the types of products consumers buy and what big tech trends exist, there’s plenty that CE retailers here at home could learn from our European counterparts—and vice versa.
The first step in that process, though, is getting to know and understand the different markets around the globe, which is something we’ve been trying to do for the better part of the past year. Often, like we would for U.S.-retail-related queries, we turn to the research community for help in educating ourselves, and that’s where GfK comes in. The global market research company is active throughout the world, and can provide exceptional insights into what retail trends are worth following.
Recently, we had the opportunity to chat with Jürgen Boyny, Global Director of Consumer Electronics for GfK. Boyny helped us paint a clearer picture of what the European consumer tech retail market looks like right now, how it differs from the U.S., and more.
Dealerscope: For our readers who might not know about GfK, tell us a little bit about the organization and your role there.
Boyny: GfK is a global market research company, active in more than 100 countries worldwide with approximately 13,000 experts working for different markets in different regions. The map included here shows origin, structure, and activities of GfK. This is status quo, but at the time we are adopting our structure to the actual needs of digital market research. So we are in a transition process.
I myself am the global lead for consumer electronics, responsible for all TV/VIDEO/HIFI/AUDIO clients, as Samsung, LG, Sony, Panasonic but also Sonos, Denon, and Onkyo. I have been looking over the consumer electronic market for 30 years. Back then the world was a pure analogue world, and we reported about CRT-TV and record players. A lot has changed since then!
What do you expect will be some of the strongest consumer electronics categories in Europe this year?
We have to keep in mind that we will have the FIFA World Cup Soccer Championship in Russia in 2018. Major sports events such as this will have an impact on the TV-market in the first half of 2018. Clear growth will be seen in the bigger screen market; we expect to see more 4k and connected TV sets sold. So TV will grow in total.
Smartphones will also grow slightly—in value more than in units. Bigger screens and pushing into the higher-end sector, the smartphone market will have a clear trading up, even household penetration will come to an natural border.
And connected and smart audio will have a positive development. Driven on one hand by Bluetooth connectivity with smartphones and speakers, but also driven by artificial intelligence. This is a change of paradigm, we believe, as these devices will be sold in connection to a service provider or retailer solutions.
What markets are struggling or declining this year?
Existing markets, where technology is fading out or replaced by connectivity will decline. As soon as the TV is connected to the content provider and Video-On-Demand services, we will have a clear break where consumers do not need a DVD/Blue Ray-Player any more. In-car navigation continues to be taken over by smartphones. Media tablets will also not grow any longer, as this sector is continuing to be replaced by bigger and bigger smartphones.
During the IFA press conference at CES 2018 you talked about screen technology and entertainment driving consumer electronics sales globally. Can you tell us a little bit more about this trend and the impact it's having?
High resolution content (4K) will rarely be broadcasted by traditional TV broadcasters, but is already being provided by companies such as Netflix and Amazon. What’s interesting, though, is that as consumers buy more and more 4K TV sets (with the highest concentration occurring in China), we see that subscriptions of pay TV continue to grow. At the same time we have more than 100 million Netflix subscribers. Essentially, better content is helping to drive the growth of the TV market and bigger-screen smartphone market.
In the U.S., consumers have been slow to adopt smart home technology over concerns with cost and privacy. Does the European market face those same challenges?
We see very similar challenges in Europe. Consumers are afraid of losing control of their home, and also the high costs are a factor against smart home solutions. China is completely different. In China, the government already controls everything. So a consumer, for example, already uses the WeChat app for nearly everything in their life, even for payments. So it really depends on the market that you’re looking at.
Online retail has been growing rapidly in the U.S. thanks to companies like Amazon and Walmart. How prolific is online shopping in Europe?
Online sales are growing as well in Europe, but on average not as quickly as in the U.S. But, again, the details there are different country-by-country. The U.K., for example, has a high online share, Mediterranean countries less so. Online sales is less driven by pure Internet players such as Amazon, but rather by a situation, that a lot of former traditional shops have caught the multi-channel-train and are doing well both running a traditional brick-and-mortar shop and doing online sales.
I know you don't report heavily on U.S. consumer electronics performance, but anecdotally, when you think about European retail and U.S. retail, how different is the shopping experience?
European sales is much more conservative. In Europe, you see stronger sales performance by the independent small electrical retailers or traditional retails organized in a buying group organization. Of course, we in Europe have technical superstores that are similar to a Best Buy. But those stores are broken up subregion-by-subregion or even country-by-country. The proliferation of the superstore that you see in the U.S. is far less exaggerated in Europe.