Online-only retailers will continue to gain market share in the CE sector and pose a threat to traditional retailers.
These are the findings of the latest WW CE Retail Distribution Report, from Futuresource, which also reported that Black Friday now dominates the consumer electronics calendar in Europe.
It also warned that continued digital innovation is enabling online-only dealers to capture market share, which poses “a clear and present threat” to other players, in particular traditional retailers.
“This year, online-only is the one channel that will grow its market share,” said James Manning Smith, research analyst at Futuresource. “That’s in terms of both retail value and unit volume, across the USA, Germany, UK and France. Looking ahead to 2021, when we focus on all online activity, Futuresource forecasts show CE retail volumes will increase by almost 50 per cent in Europe, and will account for nearly two out of every three CE purchases.”
Sales of TVs have historically been driven by bricks-and-mortar retailers due to consumer desire to experience a TV’s capabilities before making a purchase, particularly with premium TVs.
Consumer electronics chain stores continue to lead in this category, compared with mass merchants. However, the online-only channel will continue to grow, accounting for one in every five TVs sold by 2021, claimed Futuresource.
When it comes to audio hardware, CE chain stores also came out on top, currently accounting for more than 40 per cent of retail value.
However, when it came to lower-cost audio, such as headphones and Bluetooth speakers, online-only will begin to attract more consumer spend. This will largely be at the expense of the mass merchant channel.
In Europe, Media Saturn Group, which owns German CE chain Media Markt, is the largest retailer, followed by Amazon and Dixons Carphone.
“On a global scale, Amazon is in the driving seat, topping the charts for sales of TVs, audio products, smartphones and household appliances,” said Simon Bryant, associate director at Futuresource. “It’s the only significant retailer to have a share across all seven countries covered in our retail report – namely the USA, UK, Germany, France, Japan, India and China. Despite not securing the top slot for any product category in any country, the cumulative effect of Amazon’s global reach has ensured its success.
“Amazon continues to diversify its business interests, from content to media devices, to logistics and advertising,” he added. “Although not limited to pure retail, everything Amazon does leads back to retail and reinforces its core retail position.
“Moreover, with consumer interest in voice personal assistants on the rise, Alexa presents another key opportunity for Amazon to further digitalise and decentralise the pure online shopper journey. The long-term purpose of this investment is to integrate Amazon retail into the smart home, through voice-enabled hardware, ensuring Amazon becomes a key component of a consumer’s everyday life.”
To remain relevant, Futuresource argued that CE chains, buying groups and mass merchants must invest heavily in online, multichannel and omni-channel strategies.
However, despite investment, retailers are expected to experience declining profitability with future consolidated required to help maintain physical storefronts in a world that is continuing to move online.