Channel cashing in on digital lifestyle

Channel cashing in on digital lifestyle

Retail sales of digital lifestyle products have hit a new first-quarter high, prompting a call for the IT channel to cash-in on new opportunities.

The Canon Consumer Digital Lifestyle Index (CDLI) reported almost $429 million was spent in Australia on digital goods in the first quarter of 2004, an 18.6 per cent increase on the $362 million spent in the same period last year.

The CDLI, carried out by GfK Marketing Services for Canon Australia, noted particularly strong sales growth for digital cameras. This, in turn, boosted sales of inkjet printers.

Some 204,703 digital cameras were sold in the first three months of the year, a figure second only to the 297,027 units sold in Q4 2003. Inkjet printer sales grew 4.2 per cent over Q1 2004 taking the total of printers sold in Australia since 1999 to 2,147,007 - the equivalent of one printer for every seven Australians aged 15 and over.

GfK Research project director, Angus Macaskill, said this was reflected in sales of photo-quality paper, sales of which doubled during 2002-03 alone, and in doing so threatened the viability of print-shops unless they moved into other areas.

The index also noted substantial price falls for digital products in the past year - digital TVs fell 31.9 per cent, multifunction devices (MFDs) 35.8 per cent, DVD players 33.5 per cent, and digital camcorders were down 20.9 per cent.

Macaskill said percentage margins had been maintained in the channel but fewer dollars were been made on each sale. This was offset by higher sales all round.

However, he warned that smaller resellers who didn't have buying power might be squeezed more.

Westan managing director, Victor Aghtan, said while prices of digital goods were falling, sales were booming.

However, an expected convergence in the marketplace has yet to happen, since digital lifestyle products were still mainly sold in the audio visual market, which was dominated by large retail chains like Harvey Norman.

The IT channel was expected to move into this market over the next 12 months, Aghtan said, but it needed to develop a new culture.

IT products mainly sold on price, he said, but digital lifestyle products sold more through added value.

This gave resellers the scope to make extra profit through added services and products on top of the original sale, Aghtan said.

Westan had its own consumer electronics division to tackle this market. It resold BenQ products, including digital TV, projectors and MP3 players. Ingram Micro managing director, Steve Rust, also reported annual price drops of 25-30 per cent for plasma televisions and LCD monitors as consumers bought up.

He said the channel remained fragmented as it encompassed major retailers such as Harvey Norman and David Jones right through to small specialists such as Leading Edge.

“This is a market that’s on fire,” Rust said.

Falling prices on digital goods are persuading buyers to spend a little more money and invest in the next model in the range. For example, consumers were moving from a CRT screen to LCD, or buying a bigger LCD screen, he said.

The printer market was increasingly competitive, Rust said. Many vendors, including Lexmark, Samsung and HP, all reported growing demand. He said Ingram Micro had shifted more staff and resources onto these fast-growing sectors.

Tech Pacific PC and server category manager, Josh Velling, said IT prices were always falling because the market was continuously evolving.

Despite this, digital lifestyle was a robust and increasingly important part of the distributor's business.

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