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Consumer Electronics Market in South Africa


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Consumer Electronics Market in South Africa

  1. 1. Consumer Electronics Market in South AfricaReport Details:Published:September 2012No. of Pages:Price: Single User License – US$1900Discover the latest market trends and uncover sources of future market growth for the ConsumerElectronics industry in South Africa with research from Euromonitors team of in-country analysts.The Consumer Electronics in South Africa market research report includes:•Analysis of key supply-side and demand trends•Detailed segmentation of international and local products•Historic volumes and values, company and brand market shares•Five year forecasts of market trends and market growth•Robust and transparent market research methodology, conducted in-countryOur market research reports answer questions such as:•What is the market size of Consumer Electronics in South Africa?•What is the fastest growing product category?•What consumer electronics segments are growing the fastest?•What are the major technology trends in new consumer electronics products?•How has the economic downturn shaped consumer purchasing behavior when it comes to consumer electronics?•How has the economic downturn shaped consumer purchasing behavior when it comes to consumer electronics?Why buy this report?•Gain competitive intelligence about market leaders•Track key industry trends, opportunities and threats•Inform your marketing, brand, strategy and market development, sales and supply functionsEXECUTIVE SUMMARYMarket PerformanceThe majority of consumer electronics categories, with the exception of camcorders, portable mediapayers and mobile phones, performed worse in 2009 than in the previous year. This was due tothe decrease in consumer disposable income as a consequence of the economic recession.Consumer electronics, in a country where the majority of South Africans do not own a personalcomputer or television, are regarded as luxury items. It is therefore not surprising that there were adecrease in sales of luxury items during the cash strapped times that hit South Africans during2009.
  2. 2. Economic recessionSouth Africa hosted the FIFA World Cup in June 2010 and this meant that the country had toundergo several changes to be able to meet FIFA requirements. FIFA required that South Africa’stelecommunication infrastructure be upgraded to make broadband accessible to all its venues andthat a switch over from analogue to digital television was implemented. In addition, FIFAcompliance has created the opportunity for healthy competition and in July 2009, SEACOM brokeTelkom’s monopoly on international bandwidth and consumers started to see lower broadbandpricing and higher usage limits.FIFA 2010 World CupIn South Africa, multinational brands outperformed domestic brands. This can be attributed tomultinational companies’ aim to stimulate sales growth amid the recession. However, even prior tothe recession many multinational companies have been able to offer better value for money. TheSouth African electronics market cannot compete with the low-priced imports from Easterncountries and consequently, manufacturing of electronics has been declining. Many South Africancompanies import electronic components for assembly in the country, resulting in a higher cost perunit.Competitive environmentThe store based retailing and in particular electronics and appliance specialist retailers remain themost important retail channels. This can be attributed to the product knowledge and productvariety offered by specialist retailers. Although not nearly as important, internet retailing isbecoming increasingly significant. However, internet retailing is hampered by the fact that themajority of South Africans do not have a PC or internet access.Emerging categories to lead the wayIn general, the consumer electronics market in South Africa is anticipated to see positive growthover the forecast period. Growth will primarily be driven by emerging categories like netbooks,other portable computers, digital televisions and BD Players. South African consumers, as a resultof the World Cup, are expected to see similar uncapped broadband offerings as were seen in April2010, when MWEB released its uncapped broadband offering introducing a new era of unlimitedinternet connectivity.Get your copy of this report @ points covered in Table of Contents of this report includeTable of ContentsConsumer Electronics in South Africa - Industry OverviewEXECUTIVE SUMMARYMarket PerformanceEconomic recessionFIFA 2010 World CupCompetitive environmentEmerging categories to lead the way
  3. 3. KEY TRENDS AND DEVELOPMENTSICT InvestmentsDigital switch-overThe smartphone battleAfter sales supportSpecialist retailers under pressureSummary 1 Leading Specialist Retailers 2009MARKET DATADEFINITIONSSummary 2 Research SourcesConsumer Electronics in South Africa - Company ProfilesJD Group Ltd - Consumer Electronics - South AfricaSTRATEGIC DIRECTIONKEY FACTSCOMPANY BACKGROUNDChart 1 JD Group Ltd: Electric Express and Game in JohannesburgPRIVATE LABELCOMPETITIVE POSITIONINGSummary 5 JD Group Ltd: Competitive Position 2009Massmart Holding Ltd - Consumer Electronics - South AfricaSTRATEGIC DIRECTIONKEY FACTSCOMPANY BACKGROUNDChart 2 Massmart Holdings Ltd: Makro in JohannesburgPRIVATE LABELSummary 8 Massmart Holdings Ltd: Competitive Position 2009Nu-World Holdings Ltd - Consumer Electronics - South AfricaSTRATEGIC DIRECTIONKEY FACTSCOMPANY BACKGROUNDPRODUCTIONCOMPETITIVE POSITIONINGSummary 11 Nu-World Holdings Ltd: Competitive Position 2009Sinoprima Investments & Manufacturing SA Pty Ltd - Consumer Electronics - South AfricaSTRATEGIC DIRECTIONKEY FACTSCOMPANY BACKGROUNDPRODUCTIONCOMPETITIVE POSITIONINGSummary 13 Sinoprima Investments & Manufacturing Ltd: Competitive Position 2009Camcorders in South Africa - Category Analysis
  4. 4. HEADLINESTRENDSDigital camcorders are becoming increasingly popular among consumers due to the ease withwhich video clips can be downloaded to a PC and posted on social media sites. However, HDcamcorders are still too expensive for the average South African and volume growth is expected tobe driven by price erosion in the forecast period.COMPETITIVE LANDSCAPELeading players in 2009 were Canon, Sony and Samsung Electronics. Canon has managed toestablish itself in South Africa as the brand that is synonymous with cameras and camcorders inthe mind of the consumer. The brand has been a major player in the South African market for along time and has created a niche market for itself among the mid to high-end market segment.PROSPECTSCamcorders is expected to show sustainable positive growth during the forecast period with avolume CAGR of 7%. Digital camcorders and HD camcorders will continue to enjoy positivegrowth) however HD camcorders will remain unaffordable to the average South African consumer.CATEGORY DATACameras in South Africa - Category AnalysisHEADLINESTRENDSThe migration to digital cameras has taken South Africa by storm in conjunction with theincreasing popularity of social media sites such as Facebook. South African consumers’ interest indigital cameras has been stimulated by the increasing popularity of social media that encourageusers to share photos.COMPETITIVE LANDSCAPECanon South Africa leads cameras with a 21% share of volume sales, followed by Sony SouthAfrica with a 13% share and Nu-World Holdings with 11%. Canon is considered the best in termsof performance and lens quality and is the first choice for consumers that are serious aboutphotography and that want to take professional photos. However, Sony is considered as thesecond best when it comes to lens quality and performance and is gaining popularity among theyounger market segments due to its stylish design. JVC, a Nu-World Holdings brand, isconsidered the best quality camera among consumers that want a camera at an affordable pricewithout compromising on quality.PROSPECTSThe camera sector and digital cameras in particular is expected to show sustainable positivegrowth over the forecast period. Digital cameras will gain popularity due to the increase in users ofsocial media sites such as Facebook.CATEGORY DATAComputers and Peripherals in South Africa - Category AnalysisHEADLINESTRENDSIn July 2009 SEACOM arrived and consumers started to see lower broadband pricing and higherusage limits. During Q1 2009, South Africa’s economy showed negative growth for two
  5. 5. consecutive quarters. South Africas gross domestic product (GDP) growth rate for Q1 2009 stoodat -6% compared with a -2% contraction during Q4 2008.COMPETITIVE LANDSCAPEAcer Africa (Pty) Ltd leads computers with a 23% value share, closely followed by Dell SA Pty Ltd,also with a share of 23% and Mecer SA Pty Ltd with a 13% share. Microsoft SA Pty Ltd ledperipherals with a 12% share, reflecting the fragmented nature of this category.PROSPECTSSEACOM’s arrival will be followed by competitors such as EASSy (operational in July 2010) andWACS (to arrive in 2011). Another important development happened in April 2010 when MWEBreleased its uncapped broadband offering. This introduced a new era in South Africa - unlimitedinternet connectivity. However, this offering is only for ADSL and ADSL line rental in South Africawhich is relatively expensive. The internet is still something that only the marginally wealthy canafford.CATEGORY DATAHome Audio and Cinema in South Africa - Category AnalysisHEADLINESTRENDSAs mentioned, the economic recession impacted negatively on the home audio and cinema sectorin South Africa. The sector showed a decline in sales volume and value for 2009 compared to2008. Consumers had less money to spend on less ‘essential’ CE products like home audio andcinema products. In general, home audio and cinema products are considered to be less essentialfor reasons such as consumers already having televisions with built in audio systems or they areable to listen to radio on their PCs via streaming audio.COMPETITIVE LANDSCAPEHome audio and cinema products is characteristic by a relatively healthy, competitiveenvironment. During the period under review more established brands such as LG, Samsung andPanasonic performed better than less established brands such as Sansui, Sony, JVC, Sinotec,Telefunken, Wharfedale, Pioneer and Hyundai. LG, Samsung and Panasonic brands are moretrusted by South African consumers, however they are too costly for the average person. Whileless established brands are more affordable.PROSPECTSThe sector is expected to see slight but stable volume growth over the forecast period. The growthwill be driven by the consistent rise of innovative products at the forefront of technologicaladvancement. As new, more advanced products appear on the market consumers will replacetheir old products.CATEGORY DATAIn-Car Entertainment in South Africa - Category AnalysisHEADLINESTRENDSThe motor industry was particularly hard hit by the economic recession with many dealers closingtheir doors. Consequently, fewer vehicles were sold and hence the sales volume of the followingin-car entertainment categories dropped: media players, CD players, DVD players and speakers.
  6. 6. In-car navigation was the only category that performed better in 2009 compared to 2008.COMPETITIVE LANDSCAPEIn in-car media players, Amalgamated Appliance Holdings and Nu-World Holdings were theleaders, while in in-car navigation, Garmin International Inc, Route 66 Geographic InformationSystems and TomTom International BV led sales. The leaders in in-car media players are popularamong consumers that drive older vehicles and that want to buy media players that are moreaffordable.PROSPECTSIn-car entertainment is expected to grow at a CAGR of 8% in volume terms to reach 411,000 unitsin 2014. However, in-car navigation will outperform all other categories. This is because SouthAfrica has many first time in-car navigation buyers.CATEGORY DATAMobile Phones in South Africa - Category AnalysisHEADLINESTRENDSPrior to 2009 smartphones were only affordable to high-income consumers. However, during 2009smartphones gained momentum among the lower income segments. This is mainly due to thedrop in smartphone pricing. The smartphone is regarded as the latest in mobile technology and isbecoming the must have commodity for trendy younger consumer (16-30-years-old). The biggerscreen size makes it easier for users to browse the web and interact on social media sites whilecommuting and going about their daily lives.COMPETITIVE LANDSCAPEThe overall leading players were Nokia and Samsung in 2009. Nokia is an established brandwithin the mobile market and represents trustworthiness and quality for money. Samsung althoughalso considered as a trustworthy brand has managed to establish itself as the ultimate in style anddesign. It is therefore not surprising that Samsung has also shown the biggest increase in share.PROSPECTSMobile phones is expected to see sustainable growth throughout the forecast period since 3Gmobile data will become increasingly affordable.CATEGORY DATAPortable Media Players in South Africa - Category AnalysisHEADLINESTRENDSPortable media players are increasingly supporting bigger memory at affordable prices. Portablemultimedia players showed the highest growth which can be attributed to Apple’s popularityamong the youth. When comparing the volume sales (2009) for mobile phones, netbooks andportable media players, mobile phones currently outperform the other two categories. However,mobile phones are increasingly offering consumers the same functionality as the other two.However, consumers constantly on the go still prefer netbooks to mobile phones when it comes toproducing documents and extensively browsing the internet due to bigger screen size.COMPETITIVE LANDSCAPEApple Computer Inc led with a 30% share of volume sales in 2009, followed by Sony South Africa
  7. 7. with 14% and SanDisk with 11%. Apple and Sony are popular, familiar brands among consumersand are therefore the popular choice among consumers. However, SanDisk products becamemore affordable and the company has managed to create a niche market among the mid to lowerend consumer segment.PROSPECTSPortable media players such as iPods are expected to show steady growth in terms of valueduring the forecast period. Apple’s iPod is the brand expected to maintain its position within thetop three most popular brands. The Apple iPod is known for its slim design and trendy look andappeals greatly to the younger population.CATEGORY DATATelevisions and Projectors in South Africa - Category AnalysisHEADLINESTRENDSThe Soccer World Cup has meant that South Africa had to spend a lot of money on ICTinfrastructure in order to meet the FIFA requirement that broadcasting is digital. This hasaccelerated a R1 billion switch-over from analogue signal to digital terrestrial television. Initially itwas said that by the time of the World Cup (June 2010) close to 80% of South Africans watchingthe World Cup will have access to digital television. However, since initial reports, it has beenstated that only 50% of South Africans will have access to digital televisions by June 2010.Nevertheless, this will give many South Africans who do not have computers access to theinternet. Once migration to digital terrestrial television is complete, South Africa’s airwaves will beable to support up to eight times as many standard-definition television channels as currently. Thiswill mean South Africa will have more channels delivering local content.COMPETITIVE LANDSCAPEThe companies which lead sales are Amalgamated Appliance Holdings, Samsung and OneDiamond Electronics, Inc. Amalgamated Appliance Holdings’ success can be attributed to the factthat it successfully targets the middle and lower-income consumers by offering lower prices, albeitfor less established brands such as Sinotec and Sansui. Sinotec, one of the very few domesticbrands (manufactured by Sinoprima Investment & Manufacturing) also performed well in the homeaudio and cinema systems category. On the other hand, higher-end consumers are more likely tobuy Samsung and LG products.PROSPECTSThe switch-over from analogue to digital televisions will lead to a significant increase in the salesof digital televisions. The eco-friendly trend is expected to become more prominent among SouthAfrican consumers in the future. This could lead to an increase in LCD televisions compared toplasma televisions since LCD televisions are perceived as more eco-friendly.CATEGORY DATAVideo Players in South Africa - Category AnalysisHEADLINESTRENDSConsumer interest in Blu-ray high-definition DVD technology has gained momentum. However,DVD players still perform better and it will take time before South African consumers become
  8. 8. familiar with BD players. This is mainly because many consumers are uneducated about Blu-rayhigh-definition due to a lack on advertising. In addition, Blu-ray HD DVD players are also moreexpensive than ordinary DVD players.COMPETITIVE LANDSCAPEThe leading players in the BD player category were Samsung, Philips and LG. In the DVD playercategory Sony, LG and Samsung were the leaders. While in video recorders, the leading playerswere Sansui, Sanyo and Panasonic. Samsung and LG are the strongest players in the overallvideo player category. This is due to their effective marketing campaigns portraying their brandsas the latest in terms of technology and style. Samsung and LG effectively target the young andtrendy market segment through television sponsorship of programs that are popular among theyounger market segment.PROSPECTSThe sector is expected to show steady growth from 2009 to 2012, however, after that negativegrowth is expected up to 2014. The category value in 2014 will be relatively smaller than the valueat the beginning of the forecast period in 2009.CATEGORY DATAContact: for more information.