Sales Talk: Pro forma perfoming while price erosion is biting

Compiled by Patrick Avenell

In the second part of our featured excerpts series from Appliance Retailer magazine's Mid-Year Report Card, we find out how ASKO Appliances' new pro forma model is going and gain insights into sales and trends from GfK's local boss – and one of the smartest people on the planet – Gary Lamb.

Part One – Margin Calls: industry insights from Whitfords and Sampford IXL

Peter Smith
General Manager — Sales and Marketing
ASKO Appliances Australia

How has the first half of 2012 been for your business?

Despite the tough economic retail conditions, it is very pleasing to see the support of retailers for the new ASKO business model. Our 2012 sales so far are ahead of budget with very good support for our Swedish Midsummer Sale, which commenced in May.  Following a strong performance in 2011, we are very pleased with the outcome.

What are your predictions for the second half of the year?

Economic conditions around the world are quite unpredictable and, as a result, retail in our sector is extremely tough.  Consumers are much more careful before making a purchase.   At times like this, consumers seek out tried and trusted brands, such as ASKO, for good, reliable products that will withstand the test of time.

There have been some changes in the retail landscape but customers will still be going to retail outlets to purchase products. The advent of the internet will grow, but will not become the dominate player in the short term. People use the internet for information and convenience, and not just price.

What opportunities do you see for the electrical retailing industry?

In Australia, the advent of the Carbon Tax will focus people more and more on the energy and water costs. This is a great opportunity for retailers to promote “Green Appliances” that save energy and water. ASKO, with its Swedish heritage, will focus on these aspects in the future.

What’s your favourite product of 2012 so far?

The new ASKO Alfresco Dishwasher has been extremely well received by architects and designers. The new Alfresco Dishwasher has been tested by our Swedish engineers to withstand all climate conditions including the harsh environment in Australia.

With more and more Australians utilising the outdoor living space this will certainly be a great product for the future.

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Gary Lamb
Managing Director, Australia and New Zealand
GfK, Consumer Choices

How has the first half of 2012 been for the retailers and suppliers you follow and analyse?

In 25 years of analysing GfK market data in many corners of the world, the current retail environment in Australia could be the toughest I’ve seen. Ironically, it’s not because consumers have stopped buying — volumes are quite buoyant in many categories — it’s the unprecedented levels of price erosion, stripping hundreds of millions of dollars from the value of some of the major categories, that’s at the root of the problem. 

However, things haven’t been universally bad: there’s strong growth in connected devices (such as smartphones, tablets, notebook PCs, and, more recently, smart TVs); Small Appliances have, largely, remained immune from declining prices, so the category has grown in value; and Major Appliances are also holding up quite well.

On the retail front, there are a few pure player internet retailers beginning to cement their positions, and some of the clicks-and-mortar retailers are already in a position to start benefiting from the shift from traditional retail to online.

What are your predictions for the second half of the year?

We’ll probably see the last of the volume growth in the TV category, for a while. However, the introduction of IPTVs is coinciding perfectly with the natural life-cycle of flat-panel TVs. By that I mean the early-adopters of flat-panel TVs will be starting to come back into the market, so that should help fuel a shift back to larger screen sizes, premium features, branded products and, fingers crossed, a reversal in the average price trend of recent years.

I think we’ll also start to see slow-down of the meteoric growth we’ve been witnessing in smartphones, as many of the early adopters are now tied-in to contracts for a couple of years. My biggest hope is that we don’t witness a repeat of what happened to the TV category in notebooks but, unfortunately, many of the signs are already there.

What opportunities do you see for the electrical retailing industry and for retail in general?

Connected devices is where a lot of the opportunity will lie, but there’s also scope to grow value in major and small appliances, as long as average prices remain strong. For the retailers, I think it’s all about being prepared for the inevitable shifts in the channel, and to be geared-up to sell products that might not have been in their traditional portfolio.

What’s your favourite product of 2012 so far?

I’m sure, given GfK’s neutral position in the industry, you wouldn’t expect me to single-out a favourite consumer technology product — so, instead, I’ll choose my Asics 10HG football boots. They take the strain off the Achilles, and they work: I haven’t had an injury since I bought them.

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