UK leading consumer electronics boom

Consumer electronics sales are booming in western Europe as consumers buy more high-ticket products, and the UK is leading the charge, according to a new report on consumer spending.

Research released today by industry watchers GfK found that western Europeans spent 18 percent more on consumer electronics in the first half of 2006 than in the same period in 2005. 

The sector is benefiting from consumers investing more money in expensive and higher value products. GfK is predicting that Europeans will have spent €44bn on consumer electronics by the end of the year.

In western Europe, 61 per cent of total sales in the industry during the first half of 2006 were generated in the UK, Germany and France. The greatest proportion, 25 percent, was attributable to the UK.

This was followed by the German market with a share of 19 percent and France with 17 percent. The remainder is spread across seven other western European countries in which GfK collects data.

Sweden tops the growth charts with sales up 23 percent compared to the first half of 2005. Sales were up year-on-year by 20 percent in France and 18 percent in the UK.

TVs are the strongest growth driver in consumer electronics and sales are up 35 percent on the first half of 2005. One of the reasons for this was the football World Cup, according to the report.

The main reason, however, is consumers increasingly turning away from traditional CRT sets and switching to flat-screen LCD or plasma models.

Sales of LCD TVs were up 125 percent. TVs with 32in screens and over were particularly popular, with one in three consumers buying a set of this size.

Although the prices of sets are falling, each buyer this year has spent an average of €676 per TV, 25 percent higher than in the previous year, reflecting the trend towards higher value products.

DVD players and recorders were not as popular in the first half of 2006 as in 2005. Overall, four percent fewer units were sold, equating to a seven percent drop in sales value.

Demand for DVD recorders, however, was up 56 per cent and accounted for half of the total sales in the DVD device market. The reason for the rise in sales is the increased demand for more memory.

Around one in three buyers chose a recorder with a 160GB hard drive. Based on sales to date, GfK expects around 8.2 million recorders to be sold in 2006.

Demand for camcorders fell in volume terms by three percent in the first half of 2006. Pressure on prices in this market also led to a downturn of 12 percent in sales value.

By contrast, the demand for camcorders with new digital memory formats rose. DVD camcorders already account for over 20 percent of all camcorders sold and camcorders with hard discs or memory cards for seven percent.

Sales of portable audio accessories were up nine percent year-on-year in the first half of 2006. The sales of video and audio players with this technology climbed in terms of volume by 28 percent and in terms of value by 30 percent.

GfK predicts that around 37 million MP3 players will be sold in 2006.

One of the results of the digitisation of consumer electronics is the growing demand for digital storage media.

As expected, sales of USB memory sticks were up 22 percent in the first half of 2006 and memory cards by 10 percent. The two storage media together therefore account for 53 percent of total market sales.

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