No end in sight for pricing pressures

IDC analyst Lucie Jichova warns that UK buying habits will continue to squeeze retailers
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The British desire for a bargain is driving many retailers to the threat of extinction, the latest report from market research firm IDC has warned.
It shows healthy growth within the PC retail sector with UK laptop sales up 41.8 per cent, despite concerns over the economy and consumer confidence.

However, the analyst that wrote the report, Lucie Jichova has told PC Retail that the average selling price of laptops has fallen by 10.6 per cent over the past year, partly because the major increase in netbooks such as the Asus Eee PC and HP Mininote coming to market, but also because of declining consumer confidence worldwide.

"I wouldn't say prices are being affected by the credit crunch, but in terms of consumer confidence, GfK recently published some figures that suggest it is now at lower levels than see in the 90s, so that might have an effect," Jichova said.

When asked what impact falling consumer confidence was having on retailers, she said: "I think that price promotions are going to be a continuing issue for retailers. The focus on price by UK consumers is a trend we've always seen; if you compare it to Germany or the Nordics, the general price of laptops has always been much lower if you look at the average selling price.
However, she did warn that: "Promotions do tend to drive sales and that is unlikely to change anytime soon."

But there was a silver lining to the clouds, with Jichova stressing that she didn't see netbooks eating into sales of mainstream notebooks; something that could have had a far harder impact on retailer's bottom lines. "The demand for netbooks are more the opening of a different usage scenario.
"The specs of the Eee PC are quite low and we see that as appealing to people who haven't owned PCs before or want a second device for surfing or to take with them on their travels.

"We don't see them replacing mainstream laptops."

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