Consumer demand for digital technology holds strong as local retail market adjusts to changing conditions

The latest Canon Consumer Digital Lifestyle Index (Canon CDLI), released today in partnership with GfK Retail and Technology, reveals that demand for digital lifestyle products in the first six months of 2011 remained strong, as Australians bought 6.56 million digital devices at a total value of $2.8 billion. While unit sales grew slightly on 1H 2010, a 14% drop in Australian retail Average Selling Prices reduced the total cost to consumers for the digital lifestyle products taken into their homes, delivering a total saving of around $470 million.

“The latest results show that, despite reportedly low consumer sentiment for the period, strong consumer demand for technology saw volume sales keep pace with the record numbers achieved in first-half 2009 when a raft of stimulus funds hit the market,” said Jason McLean, Director – Canon Consumer Imaging, Canon Australia. “Market competition has seen a $470 million decline in sales value, saving the Australian consumer an average of $72 per device during the first six months of the year.”

“The strong volume numbers show that for consumer technology Australian retail is alive and well and consumers are taking advantage of the competitive pricing, deals and support to be found in their local stores,” says McLean. “We expect the Australian market to continue to adjust as strong local competition and global forces play out heading into Christmas.”

In response to consumer demand, categories to grow in volume terms include Personal Video Recorders (+53%), Digital SLR cameras (+18%), Personal Computers (+15%), LCD TVs (+3%) and DVD players (+4%). Following LCD TVs at number one, digital cameras are the second-most-popular category in the index, despite being a mature category with more than 80% household penetration. Also of note is the rise of 3D TVs, which account for 8% of panel TV market units (23% of the value) and Smart TVs, which account for 20% of unit sales (40% of the value).

"Consumers are clearly after seamless connectivity among their various digital devices... through features such as Wi-Fi, 3G wireless and direct connection to internet-based 'cloud' applications"

Lifestyle insights from the latest research show that innovations for quality, speed and new functions are driving the significant trend to upgrades, which is sustaining sales across categories. The perpetual innovation cycle, which sees the industry continually respond to consumer demand for more from their technology, saw plenty of opportunity for consumers to upgrade with a total of 1,182 new digital camera, camcorder and media player models alone released in the period.

“Consumers are clearly after seamless connectivity among their various digital devices and the next upgrade cycle will come as consumers see more opportunities to embed technology into their day-to-day lifestyle through features such as Wi-Fi, 3G wireless and direct connection to internet-based “cloud” applications,” says McLean. “We expect the ease of interconnectivity to perpetuate the trend to multiple device ownership, with consumers using the inherent quality and performance advantages of each product without compromise.”

According to the latest report, the seamless experience extends to the purchase process itself, as consumers look for convenience and a seamless purchase experience from researching a product to buying it. 57% of consumers reported making a purchase online, in the last month, compared to 51% only 6 months earlier. 29% of consumers reported that they used their smartphone for online shopping in the last month (up 15% year on year). Consumers also know what they want and are becoming more driven by purpose than budget when choosing their devices in some categories.

“The shopper is changing, with more people knowing what they want from their technology and looking to a range of sources for help to get the best outcome, so it’s an opportunity for the industry to cater effectively to this need,” says McLean. “The outlook for the industry in Australia is very positive given the strong consumer demand for the various technology categories, continual product innovation to meet consumer demand and the local environment of low interest rates and high product affordability.”

1H 2011 Digital Lifestyle insights include:

Innovation Nation
“The digital lifestyle is well established in Australia with household ownership in some categories greater than 80%, so we’re now seeing strong demand for upgrades to enhance the experience in terms of quality and functionality,” says McLean.

• Upgrades account for 44% of camera purchases, 40% of TV purchases and 39% of PC purchases.
• Motivation for upgrade: Better quality (No.1 for cameras); Speed (No. 1 for PCs); and innovation in functionality and formats, such as 3D and Blu-ray

Full digital content integration
“Consumers are accustomed to the interconnectivity that digital technology makes possible, and now wireless home networks, 3G mobile internet and Bluetooth are enabling full integration of digital content into our lives when and how we want it,” says McLean. “Products such as “cloud” enabled printers and IPTVs that access the Internet directly will contribute to the use of wireless networks in the home over the coming year.”

• An average of 2.51 devices are now connected to home-based WiFi networks (an increase of around 7% over 12 months)
• Around 2 in 5 consumers regularly connect their smartphone to their Wi-Fi network, and 20% connect their TV to the Wi-Fi network (up from 12% a year earlier). Smart TVs (IPTV) now account for 20% of total TV market volume (up from 10% in the previous year)
• 30% connect their printer to their home network. This is expected to grow in line with the increased share of wireless-enabled printers (51% by units versus 30% for 1H 2010)

The changing shopper
“Mirroring the networked lifestyle in Australia and the popularity of online forums and sites such as Facebook, we are changing the way we search for information and shop,” says McLean.

• Consumers are increasingly arming themselves with more information through the purchase process (internet accounts for 15% of the most influential information sources in the TV buying process; 26% for cameras/PCs)
• Consumers know what they want and are becoming more driven by purpose than budget when choosing their devices in some categories. For example 28% of consumers now approach buying a camera with specifications in mind rather than a budget, with budget falling dramatically as a purchase driver.
• 44% of camera shoppers visit online photography-related forums.
• Retailer websites have become more influential (18% of PC buyers were influenced by retailer websites, double compared with a year ago).
• 57% of consumers reported using their computers for online shopping (compared to 51% only 6 months earlier)

The complete 1H2011 Canon CDLI report can be downloaded here.

1. Survey of recent PC buyers
2. Survey of recent Smartphone buyers
3. Survey of recent TV buyers