Bump in the road for electronics

THE consumer electrical and electronic goods industry in the country experienced its worst period in past five years during the final quarter of 2013 and expects the same for the first quarter of this year.

Pensonic Holdings Bhd managing director Dixon Chew said this was the feedback obtained from its authorised dealers and suppliers in the country.

”The majority of our authorised dealers experienced a drop in sales during the final quarter compared with the same period in 2012.

”Some of them managed to offset the negative impact with higher sales of smart digital devices such as tablets,” he said.

According to Digital News Asia, which cited a GfK Malaysia report, Malaysian consumers snapped up smartphones, tablets, laptops and TVs, with sales surging to US$3.86bil (RM12.76bil) in the first 10 months of last year.

US$352mil worth of tablets were sold in the period, while the share of phablets, smart devices with phone and tablet functions, surged from 7.5% in September to 20% in October out of total mobile handset sales volume.

Refrigerators were among the popular product categories at Ban Hin Bee
Refrigerators are among the largest products sold by Ban Hin Bee.

GfK Malaysia managing director Selinna Chin said: “The rising popularity of phablets indicates that consumers are getting used to mobile devices with larger screen sizes that do not compromise on mobility at the same time.

“GfK’s insights reveal a rising demand for tablets with phone functionality — suggesting a growing consumer trend favouring the convergence of both product groups, blurring the distinction between smartphones and tablets” Chin said.

GfK is Germany’s largest market research institute.

To boost their sales, consumer electrical and electronic goods retailers in the country sold extended three year warranty for products for a fee late last year, according to Chew.

“The sales of products in the ‘brown goods’ category, in particular audio-visual products, declined in the final quarter of last year.

”Fortunately, the improved sales of our kitchen appliances, which are priced below RM1,000, helped to overcome the impact of the brown goods segment in the final quarter of last year, enabling the group to perform slightly better than the corresponding period a year ago.

Kitchen appliances on display at the Ban Hin Bee store in Penang. The company says consumers are spending more cautiously these days.
Kitchen appliances on display at the Ban Hin Bee store in Penang. The company says consumers are spending more cautiously these days.

”We also expect a slight improvement for our sales for this Chinese New Year holidays,” Chew added.

Chew says he beleives the reason for the extremely sluggish sales experienced by the local consumer electrical and electronic industry in the final quarter of 2013 has to do with the rising cost of living.

“With the cost of electricity and food going up, everyone has to tighten their spending on other things, which has an adverse impact on the domestic spending of retail goods,” Chew said.

The weakening of the ringgit also did not help the situation, as it raised the cost of importing raw materials for the assembly of consumer electrical and electronic products in the country, according to Chew.

“The cost of producing a household appliance goes up by about 3% to 6% as a consequence.

“To stay competitive, it is difficult to pass the cost to the customers. The cost can only be passed on for certain selected household appliance,” Chew said.

For the past five years, despite the economic challenges encountered, the Pensonic group has managed to improve its domestic revenue to RM221mil in 2013 compared to RM173mil in 2009 due to its mid-range pricing strategies, which has made the brand a household name among consumers in the country, Chew added.

Pensonic’s domestic sales contributes about 70% of the group’s annual revenue, while overseas sales contributes 30%.

Meanwhile, Star Electronics Sales & Services Sdn Bhd (SEC) managing director Joseph Hon said sales for September, October, and November 2013 were bad, compared with the same period in 2012.

“In October and November, sales dropped by about 15%, compared with the same period in 2012.

Products stored at SEC's warehouse in Bayan Lepas. The company says sales figures for the last few months of 2013 dropped.
Products stored at SEC’s warehouse in Bayan Lepas. The company says sales figures for the last few months of 2013 dropped.

“In December, our sales improved, but it was still flat compared with the same month in 2012.

“We expect our sales to remain flat for the Chinese New Year holidays compared to the same period last year,” he said.

According to Hon, the sales of consumer electrical and electronic products priced below RM1,500 performed much better.

“We expect sales to pick up in the second half of this year. Some of the demand will come from people moving into new homes that will obtain their certificate of completion and compliance by then.

“There will also be those who will want to buy before the implementation of the goods and services tax in April 2015, which will raise the price of goods slightly,” he said.

SEC has 20 retail outlets in the northern region.

Ban Hin Bee Sdn Bhd general manager Wilson Yeoh said consumers nowadays are spending very cautiously, in view of the rising cost of living.

“They will spend only on those household appliances and electronic products that they need to replace.

“But when they spend they appear to be choosing consumer electronic goods with energy-saving and advanced technological features, although these products are priced higher,” Yeoh said.

He added that the weakening ringgit had prompted suppliers to raise the price for a variety of consumer electrical and electronic goods sold by retailers.

“We are faced with margin erosion, as it is not easy for us to pass the cost to customers due to competition,” he added.

Bah Hin Bee has eight retail outlets in Penang and three in Kuala Lumpur.

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