Thanks to rapid product innovation, the market for in-home technology products is more popular among consumers than ever before.
UK homes are more technologically enabled than ever, which has in the past been driven by record levels of economic prosperity. For example, HD-TV usage more than doubled between July 2007 and January 2009 (now standing at 36% of all UK adults).
The downturn in the economy has changed the playing field for technology: whilst the more gadget-conscious are still fascinated by the latest devices coming to market, they might not necessarily have the disposable income or economic security to consider investing in something.
This has hit newer, more expensive innovations like Blu-ray hardest as consumers opt for the established, but less pricey ‘standard’ DVD technology, for example.
Overall, Mintel estimates a fall in home technology values of £461 million between 2008 and 2009. By the end of 2009, the market will be worth over £12 billion.
Within the sector, the digital camera market has struggled in the face of growing competition. By contrast, video cameras look a potential bright spot in the gloom, as new ultra-portable models such as the Flip come to market, combining HD and iPod-like style sensibilities.
MP3 players are suffering not so much from the recession, but the increasing drive towards convergence that has seen mobile phones and media players gain greater prominence.
Whilst hardware sales suffer due to saturation, content providers are benefiting from the continued drive towards music downloads, although the impact is dented by illegal downloads.
HDTVs could benefit from the drive for stay-at-home leisure – although continued price cuts are unlikely to boost values.
The challenge for other manufacturers and retailers in the recession is to take advantage of the potential opportunities available to them. This includes the need to ‘add value’ over and above offering simple price cuts (which according to latest Mintel research only motivates a quarter of consumers to buy something new).
This could include offering impartial guidance to getting the best value for money, alongside rigorous (and free) customer support, backed up by a clear promise that consumers will be taken care of if something breaks (and that it won’t cost extra).
Physical stores have traditionally struggled to compete with online retailers’ prices, brought on by lower overheads. As a result, online has sometimes been blamed for ‘stealing’ sales, in that consumers have gone to a store to look and talk to a sales representative and then gone online to buy the particular product elsewhere. However, Mintel’s latest research finds the opposite is true, in that retailers are benefiting from the web as a channel for finding out about new technology, before coming in-store to buy.
The success of leading sites like Amazon will continue to have a halo effect on the rest of the industry. According to Mintel’s research, positive experiences this year mean 35% of consumers are likely to do more online shopping next Christmas. The crunch factor also helps, with 21% looking to stretch the pound by going online. This will have implications in expanding demand for lesser-known online retail names, as the growing user base continues to move away from the ‘closed garden’ of high street brands, driven by the need to snatch a bargain.
Whatever the economic conditions, consumers still aspire to new technology, from a Blu-ray player (27%) to a smartphone (27%) and an HD-ready TV set (30%). It’s up to manufacturers and retailers to work together and try to convert some of this ‘want’ to actual ownership.
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