Worldwide Business Information and Market Reports

www.the-list.co.uk and www.worldmarketresearch.com

Telephone +44 1404 891528 Fax +44 1404 891717 Email reportfinder @ tiscali.co.uk

Just want contact details for one of the companies in this report? Please don't ring us - try www.companieshouse.gov.uk, www.thomweb.co.uk or www.askalix.com

Join the ReportFinder mailing list and be told of new reports

Email:

MP32007

MAPS BROWN GOODS SEPTEMBER 1997

Overview

Table of Contents

Executive Summary

Back to Electronics and Consumer Electronics Index and Shopping Cart

Back To REPORTFINDER home page and Search Engine

TABLE OF CONTENTS

Not yet available from the publisher - due soon

Back to Top

EXECUTIVE SUMMARY

The UK market for consumer electronics is valued at £2.94 billion in 1996, an increase of 14 percent on 1992. Volume sales reached 17.2 million units, an increase of 17 percent since 1992. Further growth of 4 percent by volume and value is forecast for 1997, with the main boost to spending being the windfall payments received by many savers and borrowers from the flotation of several leading building societies on the stock market.

The brown goods market in the UK, as defined by this report, covers the leading audio-visual sectors of Televisions, Video Recorders, Camcorders, Audio Systems and Separates and Portable & Personal Audio. The market is characterised by high levels of innovation, NPD and advances in technology. However, the market is also intensely competitive and as such product pricing is under constant pressure with discounting and price erosion being common features of the market. Whilst average prices have not actually declined in all sectors, if like-for-like products (in terms of features) are compared average prices can be seen to have fallen sharply since 1992.

The largest sector in the UK Brown Goods market in terms of volume is that of Portable & Personal Audio with 47 percent of the market, followed by Televisions with a 19 percent share. By value the largest sector is that of Televisions, with a 34 percent share, followed by Audio Systems & Separates with a 27 percent share.

One of the most important sectors in the brown goods market is that of Televisions, with the market worth £998 million in 1996, representing growth of 24 percent since 1992, whilst volume sales have increased by 13 percent to 3.2 million units. The market has increased more in value terms because of the move to large screen rather than small screenportable televisions. Large screen televisions command higher price premiums than small screen sets and are also more likely to incorporate features such as NICAM stereo and Fastextteletext. The strong growth in this sector is despite the fact that household penetration of televisions in the UK is already high, with 77 percent of adults owning a full size (i.e. over 51cm21" screen size) colour television according to Market Assessments exclusive research in May 1997. This research also showed that a further third owned a full size NICAM set and 65 percent owned a portable colour television.

The largest sector in terms of volume is that of Portable and Personal Audio which took 47 percent of volume sales in 1996, or 8 million units, but only 12 percent of the value at £344 million. The market has grown by 15 percent in volume terms and 20 percent by value since 1992, with the growth in CD portables and personals largely responsible for the differing growth rates. As with NICAM stereo in the televisions market, CD based portable and personal audio products command a higher price premium and as consumers upgrade they have tended to opt for CD rather than just cassette based audio products. Ownership of portable and personal audio products is high, with 72 percent of respondents in Market Assessments survey in May 1997 owning a clock radio, 65 percent owning a stereo radio recorder, 59 percent owning a personal stereo and 27 percent owning a personal CD player.

The market for Video Recorders was worth £610 million in 1996, up 13 percent on 1992, with sales of 2.3 million units, a volume increase of 24 percent. Price erosion has been particularly fierce in the VCR market, despite the widespread adoption of NICAM stereo models, with the result that entry level prices are very low. Whilst this has helped to boost volume sales, it has had the effect of starting to polarise the market between very basic entry level mono VCRs and those at the upper end of the mass market with features such as NICAM stereo, VideoPlusPDC and 4-head Long Play. The rapid price erosion of models with NICAM stereo has meant that the market growth by value has been well below that recorded in volume terms. Household penetration in the VCRs market is also approaching saturation point, with 62 percent of homes owning a mono VCR in 1997 and 31 percent owning NICAM models. There is also a trend to multiple ownership of VCRs, with older models being kept as a second recorder when it is replaced or upgraded.

A sector that has grown out of both the televisions and video recorders markets is that of Televideos. These combine a small - usually 14" screen - size television with a video recorder in one compact unit. The more basic models only have a single tuner which means that it is not possible to watch one channel and video a different one, although more expensive models, usually those with a 20" screen size, have twin tuners to make this possible. Most televideos are bought as secondary to a main set and are often used in the bedroom, where their compact nature makes them ideally suited for such use. The market has grown rapidly by 133 percent from 1995 to reach 175,000 units in 1996. The market value was estimated at £35 million in 1996.

The market for Audio Systems and Separates has shown the strongest growth of all sectors since 1992, increasing in volume terms by 32 percent to reach 3.2 million units, and by 28 percent in value to £786 million between 1992 and 1996. This growth is mainly due to the growth in popularity of mini and micro systems at the expense of midi one piece and separates based systems. As CD has taken over from vinyl as the mass market record format, there is less need for systems with a record turntable and so more compact units have emerged that fit in better with many people’s lifestyles. Mini and micro systems are also available across a wide price spectrum and so have a broader appeal than audio separates, for example. The move to cheaper, smaller systems has therefore led to greater volume growth than value growth in the market. The Audio Separates market remains a niche one but sales have stabilised in the last couple of years after a period of decline, boosted by owners of systems upgrading part or all of their existing equipment by the purchase of, for example, a CD player to complement a midi system, or speakers to improve the sound of a mini system. Despite the move to smaller systems, ownership of midi systems remains highest, at 51 percent in 1997, compared to 20 percent for minimicro systems and 33 percent for audio separates systems. In addition, a further third owned a separate non portable CD player in 1997.

The camcorders market is the smallest brown goods market in terms of volume, at 410,000 units in 1996, with the market having declined by 23 percent since 1992. By volume the market was worth £204 million in 1996, representing a fall of 40 percent since 1992. Whilst the market shows signs of stabilising, with modest growth likely over the next five years, the camcorder sector has been the main brown goods casualty of the economic recession of the early 1990s. Camcorders, despite severe price erosion, are still significantly more expensive than most brown goods, and in addition tend to appeal to a more limited target market i.e. those who may be getting married, going on a major trip abroad or starting a family. Product improvements, such as the incorporation of colour LCD viewfinders and the introduction of digital models that offer compatibility with home computers, may help to revitalise this sector over the next five years.

In terms of suppliers, the brown goods market in the UK is dominated by imports and by Far East manufacturers. The leading suppliers are generally large multinational Japanese companies, such as Matushita (who own the Panasonic and Technics brands), Sony, Aiwa, Sharp, Toshiba, Sanyo and Hitachi. In recent years there has been a growing threat at the budget end of the market in particular from South Korean companies such as Samsung, LG (formerly known as Goldstar) and Daewoo. In addition, UK based importers are active in this sector with companies such as Alba plc owning the Alba, Bush and Goodmans brands and Betacom now owning Amstrad and Fidelity. Own label products from retailers such as DixonsCurrys, Comet and Boots are also important at the budget end of the market. In terms of the overall market, Sony are market leaders by value, with 17 percent of sales, followed by PanasonicTechnics with an 11 percent share. Aiwa are overall market leaders across the audio systems market whilst Sony lead the personal audio sector whilst shares in the portable audio sector are split equally between Panasonic and Sony. Panasonic lead the VCRs and televisions markets, followed by Sony in both sectors. Toshiba are the third leading brand in the televisions market. In the camcorders sector the leading brands are Sony, Sharp and Sanyo, all manufacturers of 8mm and Hi-8 camcorders, reflecting the dominance of this medium.

The retailing of brown goods in the UK is dominated by the electrical multiples who account for the bulk of sales in all sectors except for audio separates, where independents still dominate. The electrical multiples are able to offer the widest choice of products and are usually competitive on pricing. They are also convenient for shoppers to get to, having sites in both the high street and in ’edge of town’ retail parks. The findings of the Monopolies and Mergers Commission (MMC) in June 1997 that there was a degree of price fixing in the industry by use of Recommended Retail Prices (RRP) has meant that manufacturers are no longer allowed to issue an RRP. They must now supply all retailers, including discounters. Whilst there are some views that this will increase choice and reduce prices for consumers because of increased competition between retailers, it is too early to assess how much effect this ruling will actually have in practice.

Advertising in the brown goods market overall is low in relation to overall sales, standing at well under 1 percent in most sectors. This is due partly to the high costs of above the line campaigns and to the lack of profitability in this sector which has meant that suppliers use direct promotions and below the line activities to support their products. There is likely to be some growth in advertising expenditure over the next five years as digital television takes off and widescreen sets become more popular. Other new developments such as DVD (Digital VideoVersatile Disc) are also likely to stimulate advertising of this potentially revolutionary new format which could ultimately replace the video cassette and VCR.

The future for the brown goods market over the next five years is relatively healthy, with modest growth forecast for most sectors. Whilst there will be increased competition for consumers’ income from other home entertainment products such as multimedia computers in particular, most sectors should continue to grow via replacement sales and a small number of extra first time buyers in the market. The projected decline in the number of young people aged 15-24 may restrict growth in sectors that are youth dominated, such as portable and personal audio. However, with an ageing population that is likely to spend more time on home based leisure activities, sales of VCRs and Televisions should remain strong.

In terms of new products, the launch of DVD players in 1997 may signal the beginning of the end for the conventional VCR. It is now possible to produce DVD players that can record pictures and sound digitally onto a disc. Whilst it will take some time before software becomes widely available for DVD and for prices to fall to mass market levels, if the format does become widely popular it may be that within ten years sales of conventional analogue VCRs will decline sharply. Similarly, whilst at present widescreen televisions are a minority niche market, some predict that in ten years most people will be buying widescreen 16:9 sets. As digital terrestrial and satellite broadcasting starts in 1998, production of 16:9 sets will be stepped up as more programming in this format will start.

Text © 1997 MAPS

Back to Top

Back To REPORTFINDER HOME PAGE

Ariadne - working together with our customers to enhance productivity and increase knowledge

© 1999 www.the-list.co.uk Ariadne

Last updated by Duncan Nottage 7th February 1999