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MP52190

MAPS AUDIO VISUAL RETAILING MAY 2000

Overview

Editor: Market Assessment
ISBN: 1-86111-302-1

Table of Contents

Executive Summary

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TABLE OF CONTENTS

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EXECUTIVE SUMMARY

The audio visual retailing sector grew steadily throughout the 1990s, fuelled by technological developments, a rapidly improving economy and increased consumer spending. The market, at the same time, suffered the effects of price deflation across many segments, particularly in the VCR and portable/personal audio sectors. This led to a 16 percent fall in average prices for audio visual equipment in 1999, and meant that the market as a whole fell by around 2 percent in value that year.

The total audio visual equipment market was worth £3.64bn at retail sales value in 1999 – an increase of 17 percent since 1994. The audio visual retailing market is dominated by the electrical specialist retailers, and in particular by the electrical multiples, which between them accounted for around 40 percent of sales by value in 1999.

The purchasing of audio visual equipment online is likely to increase sharply in the medium term, especially for products which consumers do not need or want to see demonstrated. Most of the major retailers have their own sites where customers can browse goods and order online, and there are also a growing number of Internet-only sites, such as Value Direct, where consumers can buy audio visual equipment at competitive prices or can order by phone.

Market Assessment commissioned original and exclusive consumer research from NOP Solutions in February 2000 to examine attitudes towards audio visual equipment in general and purchasing preferences. Around 1,000 adults were surveyed and the findings showed that respondents believe it very important to buy from a retailer where they can get professional advice about new technologies, with 84 percent expressing this view.

59 percent prefer to test out any audio or visual equipment and look for retailers that offer viewing or listening rooms. This reflects the increasingly complex nature of the audio visual equipment market and the fast pace of technological change and product convergence that is occurring.

78 percent believe it is important that a retailer can offer the widest possible range of products and brands. Price is also important, with 68 percent of respondents listing this as a major factor when purchasing audio visual equipment.

The audio visual sector is likely to reach a value of £4.3bn in retail sales by 2004. This represents a rate of growth of 19 percent at current prices between 1999 and 2004 – a lower rate of growth than for electrical goods as a whole (including white goods, computers and telecommunications products), as price deflation is more of an issue in the audio visual equipment sector than it is in other markets. Margins will remain tight for most products, despite the introduction of new products such as digital television, recordable DVD players, MP3 and Mini Disc (MD) products, and others.

The market as a whole is likely to remain concentrated among the main multiples as the product sectors converge. These retailers are better able to combine the strengths of their various businesses as the distinction between sectors such as computers and home entertainment become more blurred. Consumers are likely to remain price conscious but will need more and more help and guidance through the increasingly hi-tech world of audio visual equipment retailing.

Text © 1996 MAPS

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Last updated by Duncan Nottage 9th February 1999