UK shoppers spent £1bn less on consumer electronics in 2011

Beancounter: Retailers need 'strong internet arm' to hang on to market share

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UK retail officially continues to be the worst market to operate as a reseller after spending on consumer electronics fell by £1bn in 2011, GFK Retail stats confirmed.

The beancounter said the size of the sector had declined 4.5 per cent, but with spending down 7.5 per cent in January alone compared to the same month one year earlier, there appeared to be no short-term let-up in pressure.

GFK analyst Mark Hamilton said the "worsening picture" was perhaps explained by the VAT rise at the beginning of last year acting as a catalyst for sales, "hence in a number of areas January 2012 sales are likely to be artificially depressed by comparison".

He added: "Consumer Electronics remains the worst-performing category. This has been regularly, month by month, posting value drops of 15 per cent and more. In total more than £1bn has been taken off the value of this market since 2010."

Very few categories managed to defy this trend, he said. "High ownership of key devices and the lack of significant innovation has been a problem here."

The lack of confidence is "impacting heavily" on product-replacement cycles for nonessential items, which covers the majority of CE, said GFK.

However with new products due out in March including the third coming of the fondleslab and "large-screen events" of the Olympics and the European Football Championships, some retailers will see a benefit, said the analyst.

Online retailers outperformed bricks-and-mortar firms last year, "showing again it is difficult for any retailer to hold their total market share without a strong internet arm to the business".

In contrast to CE, the tech sector reported a 14.1 per cent hike in unit sales and 27.3 per cent in value, with fondleslabs underpinning the rises, helped along by storage, headsets, comms devices, Media Gateway and B2B software.

Sales of tablets went up 205 per cent in December and January compared to the same months a year ago, GFK revealed.

PC vendors are pinning their hopes on ultrabooks to revive flagging sales with the launch of Intel's Ivy Bridge processor and Microsoft's Windows 8 tipped to spur demand.

GFK said consumers will "postpone their decision until the launch of Windows 8" and will then cough up cash to "combine the best of both worlds". ®

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