By Claire Reilly
SYDNEY, NSW: One of Australia’s leading research groups has predicted that whitegoods may experience pricing pressure in the retail industry, with the potential for the category to slide into serious decline as new players join the market.
Macquarie Equities Research has published research on the strength of the appliance retail sector, following news this week of weaker than expected sales results from Harvey Norman and the company’s decision to close or rebrand 25 Clive Peeters and Rick Hart stores across Australia.
Analysing price deflation compared with volume sales for the second half of the 2011 financial year, Macquarie found that LCD televisions experience the biggest drop in price, edging towards the -30 per cent mark.
Whilst the plasma category did not see such a great reduction in average selling price, it did see the biggest drop in sales volume, averaging a -10 to -20 per cent decline.
A graph showing the price deflation compared to volume sales for the second half of the 2011 financial year.
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According to Macquarie researcher Rob Blythe, “the whitegoods and cooking categories were relatively unaffected by the price deflation woes when compared to the flat panel market”.
However, he was quick to add a caveat. “We understand that pricing pressure in the whitegoods market may soon increase for two reasons,” Blythe noted.
“First, emerging Korean whitegoods brand manufacturers that also operate in the flat panels category have global mandates to shift their focus to increase the market share of their whitegoods products suite, having successfully obtained a top tier position in flat panels (after 2-3 years of heavy promotional pricing in flat panels to gain market share).
“Second, Woolworths’ entry into the hardware market via its joint venture with Lowes will bring a new market entrant to the whitegoods and cooking space. We understand that Master’s has already signed up as many as 6 whitegoods brand owners to provide broad offerings.”
“Furthermore, private/control label brands that have been a significant part of the mix shift driving price deflation in flat panel TVs are expected to make a larger appearance in the category to assist in achieving margin objectives,” Blythe concluded.
This analysis follows news earlier this week that Turkish appliance giant Beko will be launching a cooking appliance and whitegoods product offering in Australia.
Current.com.au has contacted the Woolworths Group to confirm the reports of store offerings from whitegoods brands.