GfK: TCG market trend in the first six months of 2018

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GfK presents at IFA 2018 the market trends of the technical consumer goods. Here are the main findings for the different product categories.

Image by © John Smith/Corbis

Major Domestic Appliances
In the first six months of 2018, the global major domestic appliances market reached another positive growth of 3.5 percent. For the full year, GfK expects total sales of 178 billion euro for the global MDA market. That is a solid 2.2 percent more than last year, assuming a fixed euro exchange rate. The main trends contributing to this growth are multifunctional appliances, connectivity, online retail and strong sales dynamics in emerging economies.
On top of the global sales increase last year, which was already 2.6 percent, this year – as said – there is another robust growth of 2.2 percent. In the first half of 2018, it is the recoveries in Russia (+11 percent) and in LATAM (+9 percent) that are particularly exceptional. Also APAC stayed on a growth track contributing 66 percent of the total growth. This is achieved with the help of the giant Chinese market, but also champions like Vietnam (+21 percent) demonstrate outstanding opportunities. Here, supported by a strong economy and low inflation, sales of refrigerators and washing machines are constantly increasing in this emerging country. After ten years of turnover growth the German market is currently taking a breather, however, still remains the third largest MDA market in the world.
Besides, growing wealth, especially in developed countries, meets with a high willingness to invest in technical consumer goods. Hence, an increasing share of budgets are quite premium and allow purchases of recent innovations. Exceptional value drivers are hobs with integrated hoods, at an average selling price of more than 2,500 euro, which contributed to steep sales uplifts of more than 50 percent in the first half year 2018. In Germany, hobs with integrated hoods kept growing by 36 percent in the first half of 2018, already accounting for a quarter of the total built-in hobs turnover in the country. Further appreciated value features are temperature sensors in hobs, refrigerators with multi-doors and washing machines with drying functions. Overall, sales in the premium segment above 800 euro grew by eleven percent and now almost every fifth euro is spent in this price class.
Finally, APAC and particularly China keeps on moving away from being a production to an innovation hub. Digitization is treated as a priority and consumers are openly taking on connectivity and integrated digital solutions into their daily life. Hence, expectations are high when it comes to smart appliances and adoption rates are the highest around the world. In the first half of 2018, China alone accounts for nearly 50 percent of all smart appliances sold, and growth rates are still around 30 percent. In APAC, 23 percent of revenues are invested in smart appliances compared to only ten percent in Western or Eastern Europe. Nevertheless, the German market for smart home appliances has grown by 50 percent in the first half of 2018.

Small Domestic Appliances
Demand for small domestic appliances continues to grow. From January to June 2018, the global market (excluding North America) showed positive growth, with an overall increase of 7 percent for a total market value of 21.8 billion euro, assuming a fixed euro exchange rate. GfK expects an SDA global sales growth of 8 to 9 percent for the full year 2018. In the SDA markets a few trend segments represent a very large share of the growth dynamic. Over 40 percent of the global growth is attributed to the cordless handstick vacuum cleaners. Compared to the first half of 2017, their revenues increased by 51 percent. The strongest growth region for small domestic appliances is APAC. Sales in the region increased by 13 percent to 9.5 billion euro in the first half of 2018 compared to the same period of the previous year. Devices such as cordless handstick vacuum cleaners (+56 percent), robot vacuum cleaners (+32 percent) and liquidizers (+25 percent) are primarily responsible for this growth in Asia.
The topic of convenience is becoming increasingly important for SDA success globally. In the area of floor cleaning, cordless handstick vacuum cleaners continued their success story. Even the considerable sales growth of recent years has been exceeded and the sales volume is now over 1.8 billion euro (+51 percent). Taking Germany as an example, an additional 51 million euro for a total revenue of 143 million euro for cordless handstick vacuum cleaners has been realized with such devices. Sales of robot vacuum cleaners climbed considerably (+28 percent), as well as emerging convenience segments like wet & dry vacuum cleaners (+17 percent), adding convenience by making additional wet wiping redundant. The most important markets for this new type of wet cleaner are Germany (12.5 million euro) followed by France (4.4 million euro) and Great Britain (3.7 million euro) but smaller European markets are showing equal dynamics.
Besides, physical well-being is an increasingly popular topic in consumers’ lives; fitness trackers and apps speak a language. In the kitchen, liquidizers for fruit and vegetables, for example, are in demand. Driven by the APAC and LATAM markets, this product group has grown considerably, by twelve percent, achieving an overall revenue of 1 billion euro in the first half of 2018.
Dangerous levels of air pollution in some of the world’s major cities, and a higher awareness of allergies, means consumers are more concerned about the quality of air they breathe. As a result, sales of air cleaning appliances have seen an 8 percent revenue growth over the past year, making them an important driver of the small domestic appliances market. This expansion has been driven by APAC and especially China. More than half of the air cleaning market revenues comes from this region.
Finally, the connectivity is becoming more and more important for small domestic appliances. The value-based market share of connected appliances increased by a very considerable 75 percent to 1.2 billion euro in the first half of 2018. This sales jump was mainly impacted by vacuum cleaner robots with a triple digit growth and smart air cleaners which sold 50 percent more compared to last year’s period. With these growth rates, the market size of smart vacuum cleaning robots (60 percent) is bigger compared to the non-smart ones (40 percent).

Televisions
In the first half of 2018, GfK recorded total sales of 45 billion euro for the global market* for televisions. That is about one percent more than in the same period last year, spurred by this year’s FIFA World Cup in Russia. Global sales* of a total of 238 million devices are expected for 2018, which means a two percent increase compared to 2017. Furthermore, the main trends contributing to this growth are top-notch devices with high average prices, smart and connected TVs, and the recovery of emerging markets. On a regional level, LATAM fueled the global growth heavily. Those countries contributed in the first half of 2018 with a sales value growth of 25 percent towards the global turnover increase in the TV market. The region accounted for 11 percent of the global TV sales and recovered successfully from substantial losses in recent years. The regions Europe and APAC developed in a corridor between minus five percent to plus four percent.
*GfK retail panel (70 countries) and estimation for North America

Smartphones
Over the past decades the mobile phone industry has transformed itself into a highly sophisticated ecosystem. With the bar of consumer expectation about what smartphones can do constantly rising, smartphones remain the key personal device. In the first half of 2018 a total of 693.5 million smartphones were sold globally. The total revenue amounted to 215.3 billion euro, which is an increase of three percent compared to same period in 2017. Consumers show a clear trend towards premium devices, resulting in an increase in the average selling price by four percent.
Besides, with smart features growing in popularity there is increasing opportunity for voice controlled user interfaces based on big data and artificial intelligence. Emerging customized voice assistant technology allows embedded branded Artificial Intelligence capability to be used across smart home devices under one branded look and feel. Also, the combination of voice assistants with new sensors to capture gestures offers further promising possibilities. Smartphones with improved mobile connectivity, multiplayer gaming, and virtual, augmented, as well as mixed reality are further enhancing the way consumers can interact with each other, and deliver new imagination stretching experiences on the go.

Audio
From January to June 2018, GfK recorded total sales of 4.5 billion euro for the global audio devices market. Compared to the first half of last year, this is an increase of 5 percent. However, there is still growth potential in smart devices with embedded voice assistants or high-performance features that enhance the listening experience.Total combined revenues of headphones and mobile stereo headsets grew from January to June 2018 by 26 percent, close to 2 billion euro. In total, 59 million units were sold. Europe (without CIS) and APAC accounted for more than 85 percent of the global turnover. Devices with Bluetooth technology grew their sales value by 80 percent and stood for 60 percent of the global turnover from headphones and headsets, up from 42 percent the year before. This development paves the way for devices compatible with the smartphone’s voice assistant, integrating these in smart ecosystems. Considering that more and more smartphone producers are removing the headphone jack from their devices, Bluetooth enabled headphones and headsets are expected to continue their growth path. Independent of the connectivity features, devices combining advanced technologies like active noise cancelling and true wireless, and where the headphones consist of two separate ear pieces, witnessed huge sales value growth. APAC was at the forefront of this technology in 2017 and kept its leading role in this segment. The region accounted for more than 75 percent of the turnover with these products from January to June 2018. The advent of the high-performing headphones and headsets for 150 euro and more, manifested in a 15 percent increase on the average price.
Besides, multiroom devices, which allow playing different songs in different rooms, grew by eleven percent. This accounted for 23 percent of the total turnover of audio home systems, radio devices, docking/mini speakers, tuners, amplifiers, receivers and loudspeakers. The technology is becoming increasingly important, considering that major tech companies are now rolling out firmware updates to support multiroom capabilities.

PC
The need for performance and experience seems to be a driving force behind the consumer PC revenues, especially when it comes to gaming PCs and premium devices. Computers with high-end processors, high capacities of RAM, flash memory (SSD) and hybrid hard drives (hard disk drive + SSD) generate significant and growing portions of sales to consumers. The demand for consumer desktops and mobile PCs has been under pressure in the recent years. Desktop PCs declined by 14 percent, in units, in the first six months of 2018. The unit turnover with mobile PCs faced similar challenges and went down by nine percent in the same period. In spite of the unit decline, the rising average PC prices managed to stabilized the revenue (in fixed euro prices), which declined globally by five percent to 2.0 billion euro for Desktop PCs and by four percent to 13.3 billion euro for Mobile PCs. On one side, the supply and availability of key components drove the prices upward in the past year. On the other side, the demand for better performing and elegant products, which offer a premium experience and quality, has been affecting the value developments in a positive way.
Within both Mobile and Desktop computers the average selling price increased further by five and seven percent in the first half of 2018 to reach 602 euro and 527 euro respectively. Growing average prices of non-gaming PCs and expanding shares of gaming PCs invigorated this trend.

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