With Christmas just around the corner and global turmoil hogging the headlines, it can be hard to put your head about it all and get the real picture. Ben Furfie sits down with GfK's latest FIT report and brings you its findings about the IT industry.

Fighting FIT

Whether you’re a retailer or reseller, you know it is incredibly important to understand what the current trends in the market are, so that you can stay on top of them and live to fight another day.

With that in mind, we take a look at the latest GfK Facts, Information and Trends (FIT) report, and analyse the results.

Going mobile
If there is one part of the PC industry that isn’t showing any signs of a slowdown, it is PCs themselves. One of the standout figures from GfK’s FIT report was the total PC unit growth of 19 per cent year-on-year during August. Even more impressive was the 30 per cent growth in the mobile sector. The rise in sales occurred during one of the industry’s peak trading seasons: the back to school period.

"August is traditionally a very strong month in the retail sector, driven by low-end back to school promotions, and August 2008 proved to be no exception, with more units selling in August than in July," comments GfK analyst Tracy Goodfellow. Worryingly though, despite the growth, retail is not benefiting as much as it could do. "However, it is the retail sector that has experienced the biggest slow down. Retail channel growth in August was just 26 per cent in volume as opposed to 52 per cent in July, compared to the same point last year."

The shift suggests that much of the purchases that drove demand in the market were not consumer purchases, and may have been down to the current Government programme to refresh PC units in schools. "This slow-down in retail sales is evident in both deskbound and mobile PCs," adds Goodfellow. Looking closer at the figures reveals another trend: "The mobile PC segment continues to show increasing sales year-on-year, whereas the deskbound market is in steady decline. Mobile PCs now account for 85 per cent of total PC unit sales."

Visible effects
The rise in laptop sales is also having an effect on other categories that were traditionally central to the PC market. One is the monitor market; after years of decline in the CRT sector, LCD technology is also now on the decline. GfK analyst Clemence Dulau puts this down to a combination of factors coalescing to create the 12.4 per cent fall in volume sales and the 14.3 per cent decline in value. "One reason relates to the retail market, which has seen sales levels take a huge hit."

However, more worryingly, Dulau points to the increased success of notebooks as being a contributing factor to the decline: "The other reason is the continuous growth of the laptop market, in both the retail and business channels, which has cannibalised the LCD monitor industry." But, despite the doom and gloom, she is keen to point out that some parts of the market are doing well. "The only segment showing a positive trend is the widescreen LCD segment showing, month after month, a healthy growth in both volume and value."

Other areas that are being impacted include accessories such as mice and keyboards, and webcams. Interestingly, both are being impacted in different ways, with webcams suffering due to the rise of laptops, while mice and keyboards are seeing continued growth.

However, even within the growth area of mice and keyboards there are various trends having an effect on sales. Despite the rise in portable solutions, corded mice have remained the most popular form of device, outselling wireless versions by a ratio of almost three to four.

Even then there are trends exerting pressures amongst the various channels to market. "The greatest decline in price is that of notebook mice. This is more notable through the retail channel, down to £14 from £20 in February 2008," comments GfK analyst Iliana Tolia. Keyboards – another growth area – saw volume sales rise by six per cent, but in value only by 0.5 per cent in the year. "Whilst volumes are up by six per cent this August compared to last year, a declining pricing trend in the high-end segments has not allowed the market an equal growth in its value, which unfortunately remained flat year-on-year," she adds.

Indeed, price has had another interesting effect on the market, as Tolia explains: "While corded keyboard prices remain stable at around £12 per unit, prices of cordless keyboards have fallen significantly over the past five months, both in the consumer and business channels. This has not, however, resulted in a growing demand for wireless technology so far, and corded keyboards continue to outsell cordless models by a ratio of two to one in August."

One undisputed victim of the move towards laptops has been webcams, sales of which fell by seven per cent in volume and ten per cent in value compared to the same time last year. Tolia also noted that the average selling price of webcams had dropped below the £18 mark for the first time, although she concedes that there had been aggressive price promotions during the month that may have pushed the ASP down.

"August has been a noticeably good month for office equipment retailers, who are currently enjoying a successful promotional period. However, the aggressive offering has resulted in a serious decline in the average selling price in that part of the channel."

Furthermore, despite the apparent fall in demand, Tolia notes that much of the activity aside from promotions has been the consolidation of sales into mass merchandisers. "Mass merchandisers maintain their dominance in the market, demonstrating a stable average price for the past three months. Changing retailers’ strategies has resulted in better arrangement of IT products on the supermarkets’ shelves, positioning trade brands as an affordable alternative to the more respected brands," she concludes.

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