Beating the consumer spending slowdown

What to stock?

As Bergin and Gawdat explained, the consumer electronics space still has its opportunities for the channel, but it is about stocking the right products if resellers want to profit from the space. So what should resellers be pushing on the product front?

Gawdat added that Windows Mobile devices continues to sell well for Brightpoint, particularly in the SME space and GPS navigation devices also continue to perform well.

“TV is going well, convergent and multi-tasking products such as 16:9 HD LCD monitors, entry-level data projectors, storage and surprisingly the latest Centrino 2 notebooks are all healthy,” said BenQ’s Newton. “The education market is strong with considerable investment happening in the interactive whiteboard and notebook spaces so this is definitely an area worth focusing on locally.”

Newton said cash flow needs to becomes the driver for resellers’ business, as demand is weak there are plenty of bargains to be had but they can’t be taken advantage of if overstocked or resellers don’t have the cash.

“It is actually a great time for resellers if they are smart. Vendors are under significant pressure to drive sales and are looking for opportunities to make that happen,” added Newton.

Brother’s Ward said once stretched consumers will revert to their necessities, so the items that will be most affected will be fashionable products to own, the large whitegoods and consumer electronics such as plasmas and LCDs.

“The items that will continue to do well are those that are not on ‘wish lists’, items that are vital for the household and businesses. It is hard to recommend focusing on any one particular technology as a solution because it is the retail trade and manufacturing industry that will be the most affected. However, despite this downturn, I do believe that these sectors will bounce back,” said Ward.

“We just need to ride it out and I would recommend that brands and resellers should look to their competitiveness. Consumers will look for ways to save which will encourage ‘shopping around’; offer a solution that is more than just the selling of the product, for example providing helpful service solutions such as installation, additional warranties, and service. Now is the moment of truth. If you hang in there, you will be able to grab a chance to grow significantly in the future economic growth and market expansion.
Strive to maintain and expand your position in the market and overcome the difficulties,” added Ward.

Products are one aspect, but as we all know services are always an aspect the channel should look to provide. Supplying consumer support may not be suitable for all resellers, especially the more business-focused players.

However, IDC believes consumers will demand comprehensive support services as technology becomes mission-critical in the home.

The research house recently stated that the expansion of technology in the home has been accompanied by installation and troubleshooting problems that often require specialised knowledge. To help consumers overcome these challenges, IDC believes a new generation of tech support services is rising up that leverages the Internet to provide assistance remotely and directly.

“Technology has become more deeply entwined in consumers’ lives, while consumer support options have remained limited and often unsatisfying,” said Matt Healey, research manager of Software and Hardware Support Services at IDC. “However, we are quickly reaching the point where certain devices and applications are considered ‘mission-critical’ in the home. This means more consumers will require, and be willing to pay for, a higher level of support to ensure smooth operations at home.”

To better understand the technology problems that consumers are encountering, IDC analysed more than 10,000 consumer support sessions captured by support service provider PlumChoice. Key findings from this data included PC software and operating system problems were the most common, representing 41 percent of the support sessions analysed. Security problems, particularly issues associated with viruses, spyware, and malware, were the second most
common session type representing 23 percent of the sessions.

Despite the high number of security- related sessions, 82 percent of consumers indicated that they had security software installed. This suggests that consumers are not regularly updating the software to meet new threats. Other categories where consumer support is regularly needed include PC performance issues, networking, PC hardware, and peripherals that connect to the PC or network.

In conclusion, the slowdown in consumer electronics is a reality, but in times of reduced spending a more savvy approach to the market is needed. Knowing what your customers want in a time of reduced spending is an even greater black magic than normal, but there is hope in the sense that consumers do still have some money to spend and one of the things they are investing in is consumer electronics.

Above everything else, channel players need to analyse what the market is demanding and stock in-demand products and affiliated add-on offerings. Resellers doing exactly this will not only survive the slowdown, but will also be set up for any future developments
in the market, as well.