The Czech market for electronics is experiencing the biggest crisis ever. Already last year, only LCD and plasma televisions kept the stores afloat, while sales of other electronics dropped by almost 10%. Figures for this year suggest that the crisis is definitely not over.
According to data from individual electronics stores, sales of washing machines, cookers and microwave ovens, for instance, decreased by more than 9% last year. Data from market research company Gfk, which HN has at its disposal, showed that sales of dish washers fell 15% and washing machines 8% last year.
“We did not experience such falls in electronics before. There is a decline even in categories that had the potential to grow, such as dish washers and navigation,” said Pavel Sláma, head of the Datart electronics chain. Representatives of Euronics, which operates 190 outlets in the Czech Republic, expect an unfavourable situation for this year as well. “We expect total sales to drop by 5-10% this year,” Euronics spokesman Bohuslav Komín said.
This year’s “white scrap subsidy” event, in which power producer ČEZ offered a CZK 1,000 subsidy for the purchase of energy-efficient appliances, failed to boost the market. Until now, just some 5,000 customers have applied for the subsidy. “It has only speeded up the decision-making with people who had to buy a new fridge or a washing machine anyway,” said Sláma.
After a promising start in the middle of April, ČEZ representatives had forecast that the event would finish in a few weeks. However, now it seems that those roughly 12,000 appliances that the subsidy was to concern will not sell until the middle of June.
Crisis is one of the reasons behind the sales fall. “Customers are concerned about the economic development, and also their access to financing for these purchases is worse now,” said Petr Novotný, Electrolux sales director for eastern Europe.
It’s a good thing that there are TV sets
The Czech retail market for electronics is estimated at around CZK 35 billion. The only goods that keep it afloat during the crisis is set top boxes, where sales grew 81% thanks to digitisation, and plasma and LCD television sets where sales increased by more than 50%.
“However, the average price of these products has changed, it is now lower than before,” said Pavel Sláma of Datart.
The lower prices and the unwillingness of Czechs to spend more than necessary is behind the problems electronics stores are experiencing. “The decline is obvious especially with white goods. But people have also reduced purchases of smaller appliances,” Sláma added.
That is also causing problems to distributors of individual brands. Some have recorded a sales fall in the order of dozens of per cent. One of the biggest producers, Electrolux, is experiencing big difficulties. “In the category of not-integrated appliances, we expect the decline to continue until the end of this year. In the category of built-in appliances, it takes longer to return to the original figures because it reflects the stagnation on the construction market,” said Petr Novotný, Electrolux sales director for eastern Europe.
Discounts on everything
All companies are now trying to push prices as low as possible to sell their goods. For example the company Okay elektro is currently offering up to a CZK 7,000 discount on LCD televisions and has launched “happy days” on which it sells goods 10% cheaper.
However, the Czech electronics market is probably going to undergo a major change, so more discount policies will come. The chain Electroworld is about to leave the market, its outlets sought by the Slovak chain Nay. The shop was to close down in May, but the talks got stuck, according to HN information.
