Fighting back: The next frontier for consumer electronics retailers
Consumers are buying electronic devices by the boatload—but retailers are not smiling.
- March 2012
- Authored by Consumer & Shopper Insights
How are you reading this article? On a desktop PC? On a laptop? Or a smartphone, tablet or e-book ? The way people access information is just one aspect of the way that the increasing power, variety and availability of consumer electronic (CE) devices have transformed lives. For traditional retailers, though, this revolution has been a mixed blessing.
For a start, computers and electronics products are at the forefront of online retail. McKinsey research shows that in 2010, 70 percent of US consumers said they researched potential purchases of electronic products online, and 55 percent of them would consider completing their purchases over the Internet, too. In 2010, 14.5 percent of all CE products sold in the US were bought online. Online penetration isn’t as high in other developed markets, but the gap is narrowing. In Germany, 11.5 percent of CE products were bought online in 2010, up from 5.4 percent in 2005. In Australia, the figure was 7.8 percent in 2010, up from 3.6 percent five years earlier.
Then there’s price deflation. Consumers have become used to paying less for more each time they get a new electronic device. The average selling price of LCD TVs and MP3 players, for example, fell by 11 percent and 10 percent respectively in major markets between 2005 and 2010. For desktop PCs and digital cameras, prices fell 3 to 4 percent over the same period. These figures may even underestimate the true price pressure, as specifications have risen and entry-level devices have been hit hard by competition from products like mobile phones and netbooks.
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