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GfK RETAIL REPORTS Q1 / GfK. Growth from Knowledge

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GfK RETAIL REPORTS Q1 / 2018 GfK. Growth from Knowledge Every quarter, the GfK Retail Reports summarize the current developments in the biggest non-food markets in Belgian retail. It gives a clear resume
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GfK RETAIL REPORTS Q1 / 2018 GfK. Growth from Knowledge Every quarter, the GfK Retail Reports summarize the current developments in the biggest non-food markets in Belgian retail. It gives a clear resume of hard facts and sharp analyses of trends, in words and images. MARKETS IN DETAIL Here is our Q1 analysis of following markets: - RETAIL IN GENERAL» - CONSUMER ELECTRONICS» - IT & OFFICE» - TELECOM» - MAJOR DOMESTIC APPLIANCES» - SMALL DOMESTIC APPLIANCES» - MEDIA & ENTERTAINMENT» - BOOKS» - HOME IMPROVEMENT» - FASHION» GfK connects data and science. Innovative research solutions provide answers to important business questions about consumers, markets, brands and media - now and in the future. As a research and analysis partner, GfK promises its customers all over the world Growth from Knowledge. 2 MARKET INSIGHTS INTRODUCTION At the end of 2017, the Belgian non-food market declined, slightly pulling down the overall yearly results. Our hopes that 2018 would start with a bang have not fully been met, however some areas (i.e. Telecom) increased their value tremendously. Wim Boesmans Commercial Director At GfK, our aim is to provide relevant insights and predictive analytics to the field. We work in close alignment with our clients to deliver a better understanding of the Belgian consumers, retailers and producers, and the market in which we all operate. In this Market Insights report, our consultants share their conclusions drawn from the first quarter results, and their advice for the rest of the year. I wish you all the best in the next quarter. 3 RETAIL IN GENERAL Difficult start for Non-food, but seems to be fueling up for a better spring! A new year, a new chance to start with a clean slate and make Non-food great again! Let s take a look at the Belgian results from the first quarter. Unfortunately, the figures show a minor value decline of 1.9% for the measured Non-food panels, compared to the first quarter of Rachel De Greef Consultant Retail While most areas of the non-food panel share in the losses, the decline is generally limited. The worst-hit categories are Fashion (-7,6%) and Entertainment (-6,3%), but other categories that are having a rough time upholding their values in 2018 s first few months are Home Improvement (-2,3%), CE (-1,4%) and Books (-0,3%). Luckily these red figures are countered by a tremendous increase in the Telecom value (+16,2%) and a good head start in IT & Office (+4,3%). MDA (+0,8%) and SDA (+0,1%) hold steady, with results similar to the start of At a decline rate of -7,6% in comparison to last year s results, Fashion Solden sales are obviously going through a rough change. The Belgian weather being extra grey at the start of the year surely didn t help the physical sales. Another panel affected by the weather is Home Improvement. March 2018 turned out to be much less sunny than March 2017, and this takes a clear toll on the Gardening category, dragging down the value of the panel by 2,3%. 4 RETAIL IN GENERAL After a very successful 2017, the Entertainment categories seem to have made a bad start in Gaming fails to push the value up, leaving other groups such as music and movies in a free fall. Books, on the other hand, are clearly in the process of recovering after a harsh 2017, but need just a little more time to be solid. Hopes are also up for CE - although declining in Q1 by 1,4%, the upcoming World Cup Soccer could fuel TV sales in Q2! The Telecom value has continued it s winning streak from Q4 last year throughout the first quarter of the new year. Adding an impressive 16,2% to its value without volume increase - Telecom is moving towards being amongst the high-end products. Another category increasing its value through a positive price effect is IT & Office. With the average price expanding by 10%, it seems gamers especially are willing to pay the right price for a higher quality product. The Domestic Appliances categories show more stability than other panels in TCG, with Major Domesit Appliances (MDA) growing just under one percent and Small Domestic Appliances (SDA) maintaining a status quo. MDA is leaning on a declining average price combined with an increase of sales volume to increase its overall value. SDA, however, is counting on a handful of product groups that are on the rise to balance out severe losses in other groups. The game has only just begun, with the second quarter of the year usually being a very decisive one. Spring is in the field, lots of fun activities and events are bound to lure consumers out and instigate shopping of all sorts! 5 CONSUMER ELECTRONICS Continued decline, but hopes are up for rest of 2018 A bad start to the year for the CE market with a -1.4% in value and almost -9% in volume. In contrast with the performance of the total CE market, the PTV segment got off with a favorable start in value (+4.8%) during the first quarter of this year. But when it comes to volume, we are talking about the exact opposite, with a drop of -4.8%. This is due to the growth of the more expensive segments, such as OLED and high end LCD. Chris Renders Consultant Consumer Electronics & Telecom With the oncoming World cup campaigns, this could be a very promising year for the PTV market! As for the Docking/mini speakers, they started the year with value growth of +1.35%, but doing it quite slowly. In volume, the story is quite different, ending this quarter with a drop of -4%. For Audio Home Systems, the fourth largest product group in the CE category, we measured a loss of -8.5% in value and almost -5% in volume. We are ending our story on a positive note, however, with drones reaching high altitudes. In this first quarter, more than drones have been sold at a total value of almost 3 Mio Euro. In volume, we re speaking about a growth rate of +18% and, in value, more than +40%! 6 IT & OFFICE Price increase results in good value growth for Q1 During the first quarter of 2018, the IT and Office Equipment market increased in value by almost +4% to giver a total value of close to 530 Mio. The average price increased by almost 10%. Alain Brys Consultant IT & Office Equipment IT: positive results, thanks to exceptional growth in key hardware categories Several IT product groups performed excellently well during the first quarter of 2018, accounting for an increase in IT products of +5.7% to 413 Mio. Products specifically targeting the PC gaming enthusiasts continue to increase their share, especially in categories such as desk and mobile computing, gaming monitors and gaming peripherals (mice-keyboardsgaming devices). In some IT categories, more than 30% of all products sold are specifically targeting gaming customers. The Media-tablet category also once again recorded some excellent growth figures, indicating the importance of targeting customers based on their specific digital needs. Office Equipment and Consumables: focus on small photo printers and business inkjet systems. In Q1 2018, the Office Equipment and Consumables sector recorded a small decrease of -1% compared to Q1 2017, giving a total value of 127 Mio. The market for printer products benefitted from the continued success of the small instant photo printers and further developments of technologies such as continuous ink supply systems (CISS), as more and more brands introduce new products in this segment. In the MFD market, the upward trend came from growth in the business inkjet MFD product category. Sales of both inkjet and laser cartridges declined. 7 TELECOM Head start for Telecom in 2018! After a difficult final quarter in 2017, the Telecom business is back on track! Sales volume saw positive growth at +5%, but value grew even more stronger, with a gain of 16%. That this is a great start of the year is the least we can say! Chris Renders Consultant Consumer Electronics & Telecom It is clear that the Telecom market stands or falls with the performance of the Smartphone. This category realized a growth of almost 17% in value, but only +2.75% volume growth pointing to a rise in the average selling price and the increasing popularity of the high-end Smartphones. January and March saw the best performances for the Smartphone market, with March, in particular, being thanks to the launch of the new Samsung S9. Core Wearbales, on the other hand, stated the year in a lower key, with 5% value growth and a loss of -1.5% in volume. Are we heading to saturation yet? Or is this just a temporary slowdown? Next quarter will be very decisive, as it contains one of the most important months for core wearables: the month of May, a.k.a. Mother s Day month! Stay tuned for the next quarter 8 MAJOR DOMESTIC APPLIANCES Uptrend of Belgian whitegoods market continues The first quarter of 2018 has beaten last year s in terms of performance. Two trends were confirmed: Firstly, a declining average sales price, with growth in units being more pronounced than growth in value. Secondly, January Solden yet again managed to beat previous records. The market cooled down in February, but revived in March. Karel Tyberghein Consultant MDA The washing family could benefit from above average gains in all 3 product groups. A general observation is the strong push on appliances with an inverter motor. Washing machines sub-segments, such as washer-dryers, are clearly attracting more consumers, while tumble dryers are enjoying a rush on the A+++ energy class. The first quarter is traditionally less important in the cooling category, but both refrigerators and freezers showed slight increases, with growth in refrigerators being driven by volumetric innovation and enhanced consumer utilities. Results for the cooking family are mixed. It has been a while since a sharp decrease for hoods was noted - but this is actually not that surprising, since hobs with integrated hoods are booming. As a result, hobs are gaining. Rather remarkable is the stagnation of the built-in combi microwave ovens. This segment has seen tremendous growth the last 2 years, and a similar evolution is expected for SMALL DOMESTIC APPLIANCES Stability in Q1 for Small Domestic Appliances The market Small Domestic Appliances (SDA) remains stable in Q1 2018, but with many ups and downs. Kitchen Appliances sales have fallen in the first quarter of The decreasing market is mainly due to poor performance within Deep Fryers (-16%), Draught Systems (-18%), Food Preparation (-5%) and Kettles (-8%). Hot Beverage Makers and Toasters still show positive results. Caroline Cauwenberghs Consultant SDA Vacuum Cleaners and Irons show opposite results within the segment of Home Comfort. The total Vacuum Cleaners market has grown 7%, driven primarily by Robots and Handsticks. In contrast, Irons show a decline of -3%, with the negative trend coming from the Traditional Steam Iron segment. Personal Care shows a fall in retail value terms, especially in the Haircare segment, which has seen a severe decrease in sales value. Hair clippers continue their poor performance with a decline of -18%, followed by Hair stylers (-13%) and Hair dryers (-5%). The one product group that boosts sales within the Personal Care market is Dental care, with oral hygiene proving popular with consumers, resulting in significantly increased sales of +14%. 10 MEDIA & ENTERTAINMENT After a great 2017, difficult start in 2018 After four consecutive quarters without loss, Belgian home entertainment spending declined by 6.3% in Q1. Surging gaming revenues have fueled the total entertainment market throughout 2017, but failed to do so in the first quarter of 2018, decreasing 4.5% year-on-year. Conrad Hayen Senior Market Analyst Entertainment Offset by a strong rise in digital sales, the physical pc gaming market is continuing its steep decline by losing 51% year-on-year. Portable gaming has partly shifted towards mobile phone and has already been cannibalized by the hybrid Nintendo Switch for more than a year. What the Belgian gaming market has not seen for a while is a decline in home console hard- and software, which has now happened. The console game market lost just over 9% in Q1, while hardware revenues shrank by 11.2% year-on-year. The Nintendo Switch benefits from the fact it only released at the very end of Q1 last year and, consequently, continues to grow strongly in Belgium - but it can t make up for the heavy decline in Xbox One and more particularly in PS4. With a growth of 40%, gaming vouchers appear to become ever more important in the physical gaming market. Belgian DVD and Blu-Ray sales continue their strong decline, losing 23.8% year-onyear. Within DVDs, not one of the bestsellers this past quarter (i.e. GoT 7, It, Dunkirk and Thor - of which the first three were already released in 2017) sold as much as the bestseller in Q1 of Trolls. 11 MEDIA & ENTERTAINMENT With -12.1%, the decline in Belgian Blu-ray sales is a bit more gentle than that seen in DVD. Sales of Thor, the past quarter s bestseller (and only released in week 10) outsold 2017 s Doctor Strange. In the first quarter of 2017, the physical music market lost 10.7% in sales value partly due to Divide by Ed Sheeran being released in Q1 of last year and hence boosting that comparative quarter. The vinyl market is still on the rise, although with relatively limited growth of 5.3% in the first quarter of last year. Growth in subscription-based music streaming still stands at a very healthy +20%, but has slowed down for the first time in years. Unlike Q1 2017, streaming revenues have surpassed physical sales, which again marks a tipping point for the music industry. 12 BOOKS Sales of print Books in Belgium decrease slightly With a -0.3% dip in revenue, the Belgian book market is still declining, but shows signs of gradually recovering, following losses of -2.3% in the third and -2.5% in the last quarter of After successive declines in early 2018, Flemish book sales in March grew 11.2%, leaving the first quarter just out of the red with an increase of 1.1%. Conrad Hayen Senior Market Analyst Entertainment Book sales in Wallonia also experienced a strong end of the first quarter. As in Flanders, this was largely due to the early timing of the traditionally very strong Easter week, which fell in Q1 this year, but was in Q2 in However, it still dropped 2.3% year-on-year. Of course, the children s book sales benefited largely from this early Easter, with Flemish sales, in particular, achieving over 21% growth compared to March Inevitably, a backlash in April will be very likely. The Non-fiction Informative segment (+4.7%) continues it s the strong flow of last year, with literature sales are also recovering (+3.5%), albeit without the impressive sales number of the bestsellers of one year earlier. Comic books dipped significantly in Q1 (-7.1%), as did the important segment of Cookbooks (-5.8%). This was due, on the one hand, to a certain impact of the regulated book price and, on the other hand, to the waning popularity of Jeroen Meus and Pascale Naessens books. Still, the Q1 bestseller in Belgium is yet again a Flemish cookbook, but this time not by any of the aforementioned usual suspects. Instead, four out of the five bestselling books in Flanders in Q1 are part of Sandra Bekkari s Nooit meer diëten series (published by Borgerhoff & Lamberigts). 13 HOME IMPROVEMENT Declining turnover in March undermines Q1 Home Improvement results Initial signs for 2018 were positive, with Home Improvement retail turnover growing in January and February by 1% and 2.8% respectively, compared to the same month the previous year. This was the sector s first turnover growth measured in a six-month period. However, the Belgian Home Improvement sector faltered again, as turnover in March plummeted by 8.6%, dragging down the overall quarterly results to a decline of 2.3%. Kristof Scheys Consultant Home & Living The gardening category seems to be the main culprit for this steep decline. Turnover of the category fell approximately 10 million EUR, compared to the first quarter of Although the losses are spread between the different segments, the declining turnover of garden chemistry, powered garden tools and garden furniture had the biggest impact on the total value. On the other hand, it should be noted that March 2017 was an exceptional month for the Home Improvement sector, with close to double-digit growth. Therefore, retailers and manufacturers should not panic when seeing these disappointing Q1 figures. In the resilient Belgian Home Improvement sector, we know that sales can rebound quickly, as the demand for gardening products picks up further into the season. 14 FASHION Is offline shopping suffering from the rise of online retailers? Whereas 2015 and 2016 showed stable growth during the sales month of January, 2018 mirrored 2017 in showing a big loss. Unfortunately, February and March also failed to bring any growth, compared to the same months last year, which is why we ended the first quarter of 2018 with a decline of -7.6% in value. Thalia De Mesmaeker Consultant Fashion It is difficult to point out one wrongdoer responsible for driving these negative sales, but the a-typical weather in Belgium is certainly not helping our Fashion retailers, who are mainly selling via offline channels. In January, the average temperature was higher than in previous years, but there were significantly more rainy and stormy days. In addition, the number of sun hours was notably lower than the average. In February, we experienced the opposite, where the average temperature was lower, but with less rain and more sun. March was a quite normal month compared to other years. Total Outerwear has suffered the most in the first quarter of 2018, where not one gender or age category was able to grow. In addition, the Shoes category is experiencing hard times too, especially Women Shoes. Shoes for Men and Kids still managed to find some growth in the first 3 months of 2018, compared to the same months last year. Looking at Underwear & Legwear, this category showed stable growth during the first months of the year, with only March being slightly negative. However for Personal Accessories another important category - there was no growth during the beginning of COLOFON Retail Reports Belgium is a quarterly publication by GfK, distributed in hard copy to all active Belgian clients and interested parties through our website This publication provides insight in the current evolutions within the major non-food markets in Belgian retail. GfK does not assume responsibility for any misprints or the contents of the advertisements contained herein. Copyright reserved to GfK No part of this publication may be published or reproduced without prior written consent by the publisher. Concept and realisation Marijn van Zomeren Corporate GfK Marketing Team Editorial team Chris Renders, Alain Brys, Caroline Cauwenberghs, Vanessa Theunissen, Karel Tyberghein, Thalia De Mesmaeker, Conrad Hayen, Kristof Scheys, Rachel De Greef Editorial coordination Rachel De Greef and Hannah Dymond 16 EDITORIAL OFFICE The editorial office of Retail Reports can be reached by By post: GfK T.a.v. Redactie Retail Reports België Arnould Nobelstraat 42 B-3000 Leuven Want to stay up to date about the trends in the Belgian Retail landscape? Send an to to sign up for the Retail Reports or to receive a previous version. 17
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