Concerns over high fuel prices and increasing cost of essential items are spurring consumers to tighten their purse strings. One market likely to feel the impact of this austerity measure is consumer electronics.

Endoh sees customers becoming more price-conscious when buying home appliances.

Sivakumar says the fuel price hike has not made an obvious impact on the local ICT market yet.

Zaki says product reliability and price will be key.

Audra advises consumers to buy when necessary.

Cautious ICT spending for now By Rozana Sani

SPENDING on information and communications technology (ICT) and digital lifestyle products in the consumer market looks likely to come to a halt over the next two to three months, as household spending readjusts in terms of priority.

According to research company IDC Malaysia, the most affected will be the lower-income group, and the impact will most likely be stronger outside the Klang Valley.

“In the short term (next four to six months), consumers will be more cautious in their spending, especially when there’s speculation that petrol prices will go up to RM4 two months from now. But as the fuel surge starts to kick into their normal lives, consumers will eventually move on and start spending again,” says IDC associate analyst Jaygan Fu Ponnudurai.

He also anticipates the uptake of local consumer ICT goods such as desktops, laptops and printers to go through a slight rough patch.

“Consumer spending needs to pick up in six to 12 months with stimulus from the Government to lessen the burden of consumers. Otherwise, this will eventually affect the commercial market, particularly companies that depend heavily on local demand,” he says.

Jaygan sees notebooks to continue spearheading the PC market, especially through the retail channel – thanks to the insignificant price gap between portables and desktops. Besides, notebook prices have fallen steeply following stiff competition among vendors to substantiate themselves in the marketplace.

Apart from that, the mobility factor offered by portables, enabling consumers to be connected to the Internet, is seen as a key driver to push sales.

“One of the direct effects of the fuel surge is the distribution cost to warehouses and retail outlets. To be competitive, vendors should work closely with channel partners to leverage on the cost of the increase in transportation with efficiency in daily operations. On the contrary, vendors should encourage PC sales through monthly instalments with minimal interest rates, which will be deemed more affordable among consumers if prices of ICT products were to be increased,” Jaygan explains.

Manufacturers, retailers still upbeat By Chandra Devi and Rozana Sani

A domino effect translating into higher cost of living seems inevitable with the increasing oil prices. A natural reaction from consumers will be to rethink their buying habits, including electronic products. How do consumer electronics manufacturers and retailers react to this frugal living lifestyle?

Panasonic Malaysia

Managing director Tony Endoh believes that it is a good time for the company to promote its energy-saving products, which are also eco-friendly.

“Panasonic’s home appliances such as air-conditioners and refrigerators are equipped with Inverter technology, which provides up to 50 per cent in energy savings.

“We also strive to increase sales of our Viera plasma TVs. We believe this is a good opportunity to shift consumers’ attention towards the energy-efficient attributes of our plasmas that will enable them to lower their energy consumption and eventually gain financial savings, especially in light of the rising cost of energy,” he says.

Sales of home appliances will remain stable during these trying times, as these products have become a household necessity. But consumers might be more price-conscious when buying such products, Endoh says.

Toshiba

Despite the hike in fuel prices and anticipated rise in other costs, Toshiba is optimistic about its sales growth, says group head, audio-visual product marketing Calveen Chou Weng Keong.

He rationalises that prices of consumer electronics are spiralling downwards due to mass production, so consumers will continue to buy such products despite the rise in cost of living.

Nonetheless, Toshiba has plans to address the anticipated change in spending patterns among consumers and attract frugal shoppers.

“On our side, we are aiming to produce and market more affordable products without sacrificing quality. We are also collaborating with dealers to make payments more flexible for consumers,” Chou says.

While agreeing that not all products will remain resistant to the current economic downturn, Chou feels strongly that flat-panel TV sets, in particular liquid crystal display TVs, will continue their reign in the market.

In fact, he thinks that the increase in petrol prices might just work in TV manufacturers’ favour.

Senheng and SenQ

Managing director K.H. Lim anticipates customers’ buying patterns to shift in two areas: a move towards selecting low electric power consumption products, and a shift of preference in payment method to an easy payment mode.

“End users prefer to save their cash in the bank or in hand. But they will not stop buying since these products help to speed up household work and enable them to have a better quality of life,” he says.

Lim believes that sporting events such as Euro 2008 and the upcoming Beijing Olympics are a boon to players in the electronics and digital lifestyle market.

“With these two events, we foresee stronger demand for slim TVs. This will enable us to cover losses from the rest of the product group,” he says.

Nevertheless, Senheng and SenQ are taking measures to cushion the impact of the fuel price hike and ensure that overall consumer spending will continue.

“First, we have to ensure our operation costs will not increase too much as we still have room for productivity and efficiency.

“Second, our sourcing department will try to get the best deal from our suppliers through big volume purchases.

“Third, we have to tighten our internal controls for less wastage.

“And fourth, we have to make sure our people deliver the right products and services to enhance better customer satisfaction,” Lim points out.

Carrefour

Carrefour has not seen an obvious impact of the fuel price hike on the local consumer ICT and electronics products market.

“Based on our sales report from June 4 to 10, there is no significant difference compared to the report before the fuel price hike. This is because the items’ prices are still unchanged for now. But we believe that sooner or later, consumer spending will be affected,” says marketing and communications director Sivakumar Haridas.

“There is also no impact or increase from suppliers in their cost prices. We can only see the real outcome when the items’ prices are increased.”

Sivakumar assures that Carrefour is committed to the promise made in its recently launched price-cut campaign Lebih Hebat, Lebih Jimat, which is to go beyond the principles of just offering the lowest prices, services and facilities.

“Carrefour has further reduced its prices compared to last year’s campaign. This offer is complemented with our money-back guarantee of twice the price difference – between Carrefour’s price and the price offered in other retail outlets should the latter price be cheaper than Carrefour’s, with terms and conditions applied,” he explains.

With this lower price guaranteed policy, Carrefour is taking major steps to counter people’s perception towards the fuel price hike, he adds.

Courts Mammoth

The company is confident that it will continue to experience double-digit growth in its digital IT product category for the coming 2008/2009 financial year.

“We are very optimistic about the IT segment due to the huge untapped potential of the market. When made affordable, our customers do not have to cut back on things that they need. At Courts, it’s about creating an affordable lifestyle for our customers, as evidenced in one of the initiatives rolled out last year, the Get IT campaign, where Courts offered PCs from as low as RM9.99 per week,” says commercial director Chris Yong.

“The range of notebooks, desktops and accessories had grown tremendously in the last 18 months. The Get IT campaign also supported Courts’ belief that every Malaysian family deserves a PC. It was a very successful campaign last year and by popular demand, we repeated the campaign this year, naming it Get IT 2. It is seeing similar success.”

Consumers play prudent By Izwan Ismail

Zaki Isa, project manager, EMIT service projects, ExxonMobil:

 ICT/electronics products will still be in demand even with the high fuel prices. But there will be a shift in buying patterns.

Product reliability and price will remain the core factors that consumers will look into before deciding on a purchase. Many will be careful in choosing their products now that they have a smaller purchasing power. But the good thing is, competition in the ICT market could bring prices down further.

Audra Roslani, public relations account executive, Hill & Knowlton:

In times like this, being selective is important. It would be advisable to buy only when necessary rather than to keep up with trends.

I foresee ICT/electronics products could be one of the hardest-hit areas of consumer goods.

However, products could become more affordable in the coming months because retailers would have to clear existing stock to make way for newer products to cut down on their ICT/electronics expenditure.

Kamal Ariffin Othman, senior executive, corporate communications, Mimos:

I would now need more time to make a purchase. I want to ensure that I get the best value for money, thus the need for frequent visits to retail outlets to get the best possible deal. My advice is buy only what you need and within your budget.