By Patrick Avenell
While average sales prices in appliance categories have remained stable during 2013, the consumer electronics categories have suffered a decline of over 10 per cent per annum, with price erosion in tablet computers particularly devastating, according to a report released by Credit Suisse.
Research performed by analysts Grant Saligari and James O’Brien confirmed what many in the retail electronics and appliance industries have long suspected: online retailers are considerably cheaper than bricks and mortar stores.
“Price deflation in most consumer electronics categories has accelerated during March and April 2013 following a period of prices holding up during the start of 2013,” the Credit Suisse report said.
“A lack of promotional discounting has left the rate of deflation steady in our whitegoods basket. The category experiences relatively fewer price fluctuations than consumer electronics. Currently Whitegoods products in survey are deflating at 4.5 per cent per annum, on average.”
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Of the retailers studied for this report, Credit Suisse found Harvey Norman to have the highest advertised prices for whitegoods and small appliances, followed by Bing Lee, The Good Guys, JB Home, Masters and Appliances Online.
Noticeable trends during the first four months of 2013 include a gradual rise in advertised prices at JB Home and a sharp decline for The Good Guys.
“Appliances Online is the price leader in whitegoods retailing,” the report concludes. “Masters and JB Home present prices around 2-to-4 per cent above Appliances Online and were joined by The Good Guys in February in presenting this price proposition.
“Harvey Norman and Bing Lee display advertised prices consistently above the other retailers in our sample. We see risk to Harvey Norman through this pricing position by appearing uncompetitive in an industry moving towards an ‘everyday low price’ model.”
This time last year, Appliances Online CEO John Winning hit out at retailers advertising the cheapest prices, with specific reference to JB Hi-Fi.
“It has been widely reported that electronics retailer JB Hi-Fi has slumped to a three-year low, after the chain cut its full-year profit outlook because rampant discounting has damaged margins. Are you honestly shocked?
“When your tag line is ‘Always Cheapest Prices’ it should be no surprise they would continue to discount against other retailers to the point of not being profitable. Price has become the only trick left as many businesses swap knowledgeable sales personnel for a cheapest price guarantee,” Winning wrote in a blog entry dated 2 May 2012.
In the consumer electronics categories, Dick Smith is the most expensive, followed by Harvey Norman JB Hi-Fi and Kogan. All four retailers are currently showing long term declines in advertised prices.
Looking at individual categories, price declines in TVs and Cameras have been around 15-to-20 per cent, while tablets have suffered a drastic 24.1 per cent decline since mid-2012, including a 10 per cent drop during March 2013.