STATE OF THE CE INDUSTRY
…and the potential impact on product returns.
Steve Koenig
Director, Industry Analysis
Consumer Electronics Association
@KoenigSteve
skoenig@CE.org
With Special
Focus On:
Today’s Trends … Tomorrow’s Opportunities
•
•
•
•
Macro overview
Channel trends
Shopping Behavior
Purchase Drivers
What does all this mean for product returns?
MACRO OVERVIEW
Industry Megatrends
DEVICES
• Mobility and connectivity
CONSUMERS
• Consumer Empowerment
RETAILING
• Engagement
Mobile
Connected
Devices
M-commerce
Showrooming
Social
More $ from fewer customers
Relationships, community
Partnerships
Total U.S. CE Shipment Revenue
(in millions)
$169,793
%
Growth:
2009
$195,008
$202,311
$202,629
$211,730
6.6%
7.7%
3.7%
0.2%
4.5%
2010
2011
2012
2013e
2014p
$180,983
Source: CEA, U.S. CE Sales and Forecasts, July 2013
CE Big Five
2013 Shipment Dollars (Billions)
37.9
27.3
17.2
16.8
4.6
% HH
Owning
Smartphones
Tablets
Mobile PCs
LCD TVs
Digital
Cameras
58%
41%
65%
62%
73%
Source: CEA
CE Lifecycles
9 Years
4 Years
3 Years
2 Years
Cell phone that is not a
smartphone
79%
Dedicated e-reader
61%
Portable game device
60%
Camcorder
59%
Portable digital
audio/MP3 player
48%
40%
Video game console
34%
Desktop computer
Digital camera
26%
19%
Tablet computer
DVD or Blu-ray Disc player
Smartphone
HDTV
Most at risk in the
near future
51%
GPS or navigation device
Laptop/netbook computer
At immediate risk
of becoming
obsolete
18%
9%
7%
5%
Source: CEA, 15th Annual CE Ownership Study, April 2013
Trending in Technology
CE returns watchlist?
VIDEO
• Ultra HDTV
AUDIO
• Wireless Speakers
• Soundbars
• Headphones
GAMING • Xbox ONE, PS4
MOBILE
• Wearable Tech
CES Tech Zone
CHANNEL TRENDS
% of CE Dollar Sales by Macro Channel
4Q End Sept 2013
4.3
31.5
Physical Store
Online
Other Channel
64.2
Source: TraQline US Consumer Survey – Total CE
Internet Retailers Continue to Gain $ Share
$ Market Share
11-12
Change %
12-13
Change %
% 4Q End
Sept 2013
Discount Store
0.4
0.1
23.5
Elec/majap Store
-0.2
-1.0
30.1
Direct / Internet
1.0
1.7
15.9
Office Supply
-0.3
-0.2
3.4
Computer Spec
-1.0
-0.7
16.8
Other
0.1
0.0
10.3
Source: TraQline US Consumer Survey – Total CE
CE Dollar Market Share: 4Q End Sept 2013
Costco
4%
Target
3%
Sam’s Club
2%
Amazon.Com
8%
Dell
5%
All Others
31%
Apple
9%
Walmart
12%
Best Buy
26%
Source: TraQline Dollars R4Q Q2’13
Retailing Trends
SUNRISE
Store within a Store
Brand Stores
Specialty Stores
Pop-Up Stores
SUNSET
Big Box Retail
Competing on Price
Customer=Commodity
CE Superstores Redefined
• Smaller Footprints
• Store within a Store
• Solution Selling
• Relationships
• Destination, Demos
• Service
Impact to Returns
GOOD • Brand and specialty stores potentially
better at solution selling.
• Retailers emphasize service; offer
set-up
BAD
• Online: more purchases ‘in absentia’?
• Value mix moving up (higher
expectations?)
(MORE MOBILE)
SHOPPING BEHAVIOR
Spending on Consumer Electronics
Average Annual Consumer Spend
All Adults
2013
2012
Annual Household Spend
$746
$552
Nothing/Don't
know
Male
Female
$961
16%
2013
2012
20%
$693
$544
$410
49%
$1,000 or less
53%
18-24
$706
$513
$1,171
25-34
35-44
45-54
55+
$722
13%
$1,001-$2,000
$931
13%
$765
$686
$613
$493
$351
16%
$2,001-$5,000
10%
$1,397
Early Adopters
$914
$815
$784
Mid Adopters
Late Adopters
$468
$402
Source: CEA CE Ownership and Market Potential Study (2013)
Base: U.S. adults (n=2,000)
7%
$5,000 +
4%
Average Annual
Household Spend:
2012: $961
2013: $1,312
Where Consumers Browse and Research CE
Physical Store
72%
Standard Website
Optimized Mobile Site
Mobile App
67%
23%
18%
Source: CEA Multi-Channel Alignment in CE Retail (2013)
Base: Online U.S. Adults (n=1,027)
Question 4: “How often do you use each of the following retail channels when browsing for and researching electronics products?”
Omnichannel Marketing
CEA Holiday Research:
50% of consumers will use a mobile
device to help them shop for CE.
2013 Holiday Mobile Channel Sales
15%
8.4
Of Online Holiday Sales
Billion Dollars
Pre-Purchase Research Activities
Look Up Information About Product on
Internet
48%
Compare Retailer Prices
45%
Go To Store Which Sells the Product
33%
Ask Someone You Know About Product
21%
Find Someone Who Owns Product
11%
Look for Product in Newspaper Ads
11%
Look for Product in Magazines
6%
Visit Brand's Social Networking Page
6%
Source: CEA, Millennials: The New Face of Retail (2013)
Base: Online U.S. U.S. Consumers ages 13+
Q: Which of the following activities, if any, did you do before purchasing the electronics product you purchased most recently?
General In-Store Pre-Purchase Activities
51%
See or touch the product
47%
Talk to salesperson about product
33%
Play with or use the product
32%
Look at the product packaging
29%
Get demonstration of product
Get recommendation from salesperson brand/model
to buy
Read customer ratings / reviews for product using a
mobile device
Compare prices for product using mobile device
Search for more information on product using mobile
device
25%
18%
15%
10%
Source: CEA, Millennials: The New Face of Retail (2013)
Base: Online U.S. U.S. Consumers ages 13+
Q: Which of the following activities do you usually do at a BRICK AND MORTAR STORE before purchasing an electronics product?
Mobile Device Used for Shopping at Physical Store
22%
2%
7%
13%
26%
37%
15%
Every time
(100%)
Usually
(75-99%)
Often
(50-74%)
Sometimes
(25-49%)
Rarely
(1-24%)
Never
(0%)
Source: CEA Multi-Channel Alignment in CE Retail (2013)
Base: Online U.S. Adults (n=1,027)
Question 20, “How often do you use a mobile device, such as a smartphone or tablet, when shopping for electronics products in a retailer’s physical store?”
Impact on Returns
GOOD • More than 1-800 number and web-page.
• Consumers help themselves
– Set-up, troubleshooting, repair
BAD • Compulsive Buying?
• Gluttony of online purchasing
Site-to-Store Shipping is growing
% Online Customers who choose “ship to store”
50
4%
-5%
-10%
45
40
35
30
25
7%
7%
4%
20
5%
15
10
5
0
Walmart
Best Buy
Sears
Staples
2012 Q2
Apple
Target
2013 Q2
Source: TraQline Units R4Q Q2’13
Costco
WHAT’S DRIVING
THE PURCHASE?
CE Product Purchase Drivers
Price
Quality
Product features
Ease of use
Warranty
Product reviews
Previous experience with brand
Style or design
Brand
Family/friend/coworker recommendations
Environmental friendliness
Salesperson recommendations
Family members have it
Friends have it
88%
87%
86%
84%
76%
74%
72%
68%
67%
53%
38%
33%
30%
27%
Source: CEA, Millennials: The New Face of Retail (2013)
Base: Online U.S. Consumers ages 13+
Q: When you are deciding which electronics products to buy, how important are each of the following in your decision process?
Experience & Assortment Increasingly
Important in Store Selection
%
Competitive price
69
%
68
24
67
23.5
66
23
65
22.5
64
22
63
21.5
62
21
61
20.5
60
20
4Q End Jun
2009
4Q End Jun
2010
4Q End Jun
2011
4Q End Jun
2012
4Q End Jun
2013
Experience and Selection
4Q End Jun
2009
4Q End Jun
2010
4Q End Jun
2011
Previous experience with store
4Q End Jun
2012
4Q End Jun
2013
Good selection of products
Source: TraQline Units R4Q Q2’13
Impact to Returns
GOOD • More to the buy than just price.
• Trusted brands
• Shoppers seeking experience and
know-how.
BAD
• Bargain hunters will persist
• Lower consumer tolerance for
product/set-up issues?
2014 International CES:
Hot Products To Watch
Theme for 2014 CES
CONTEXT
CONNECTIVITY
DEVICES
Smartphones
• Trends for 2014
– Curved, semi-flexible screens
• Samsung and LG
• Will trickle down to other OEMs later
– Pushing the limits of pixel density (PPI)
– Much larger batteries
– 4K video capture
– More size experimentation
Smartphones
• Samsung Galaxy Round
–
–
–
–
Curved 1080p AMOLED display
MSRP ~$1300 (import)
US release early 2014
Same specs as Note 3
• LG G Flex
– Curved, flexible 6-inch 720p
screen
– MSRP ~$1000 (import)
– Screen can flex up to 88 lbs
force
Smartphones
• Huawei Ascend Mate II
– Follow-up to 2013 CES debut
– 2GB RAM, octa-core
processor
– Likely 6-inch 720p screen
• Sony Xperia Z2
– Follow up to 2013 CES launch
– Sony’s 2014 flagship
– 20MP camera, 4K video
capture
– Water and dust resistant
Tablets
• Trends for 2014
– Size experimentation above 10.1 inches
– Dual operating systems
– X86 based designs might get some attention
Tablets
• Panasonic ToughPad 4K
– 20-inch Windows 8.1 tablet
– 2840x2560 IPS screen
– Designed for “creatives” with
stylus and Intel Core
processor
• Huawei PhoPad
–
–
–
–
Rumored CES release
Competitor to Asus PadFone
Smartphone docks into tablet
Asus TODAY announced
PadFone v2 coming to US in
2014…
• Samsung Galaxy Note 12.2
– Rumored to be in production
– Possible CES debut?
TVs: UHD 4K and Beyond
• Trends for 2014
– Ultra HD everything, everywhere
– Curved (and possibly flexible) displays
– More OLED promises?
– What about Ultra HD content
• 2013 Netflix announcement
TVs: UHD 4K and Beyond
• LG Curved OLED TV
– 77” curved OLED
– 3D and SmartTV capable
• Flexible TVs
– Korean sources report that
Samsung and LG may demo
flexible TVs
– Manipulate viewing angles for
best possible picture
– What about 3D?
• Samsung 111” Ultra HD
– Claim: World’s largest
240 Hz Ultra HD TV
• Dish Network Virtual Joey
app
– Allows Dish customers access
to content on other devices
(consoles, SmartTVs)
– Allows access without STB
Health & Fitness
• Trends for 2014
– Product mix is all over the map
– Lots of traditional products with smartphone
integration
– CE bridges gap between electronics and other
industries.
Health & Fitness
• Reebok Checklight
– Checklight detects
concussive impacts to
athletes
– Concussions in youth
sports are a major
concern
• Sleep Number x12 Bed
– Allows for voicecontrolled adjustments
– Sleep tracking tech
integrated with sleep
patterns and quality data
3D Printing
• Trends for 2014
– A media darling, 3D printing is maturing
– Format wars?
• Extrusion vs. stereolithography
– Price vs. output quality
3D Printing
• WobbleWorks 3Doodler
– World’s first 3D printing pen
– Heats and cools plastic as it
passes through the pen
– $100, available Feb.
• Pirate 3D “Buccaneer”
– Began as a Kickstarter project
– High-res 3D printer for
consumer use
– Has its own “app store” to
download design files
– $500, available April
Wearables
• Trends for 2014
– Wearables will be everywhere
• Smartwatches will be the main focus
– Most wearables will be focused on the sensors
embedded in them
– Innovation for wearables will be in software and
how much like a “regular accessory” they look
• Geek chic is not going to work for everyone
Wearables
• Neptune Pine Smartwatch
– Takes a SIM card, requires no
additional phone
– Runs full Android OS
– 2.4” screen, dual 5MP cameras
– Started in 2013 as a Kickstarter
project
• Qualcomm Toq
– Works with Android
smartphones
– Uses an always-on Mirasol epaper display
– Charges wirelessly and lasts
for several days between
charges
Parting Thoughts
• Mobile technology: the epicenter for returns?
• The channel continues to innovate.
– Engagement: SwS, apps, social, service, stores
– Omnichannel Marketing
• Price still important, but other factors rising.
– Changing the narrative
• CES 2014: Devices, Connectivity, Context
Steve Koenig
Director, Industry Analysis
Consumer Electronics Association
@KoenigSteve
skoenig@CE.org