What will surprise the electronics and home appliances market in 2020

Leading players in the electronics and home appliances market talk about the important changes that await the industry in 2020, as well as about the trends which will determine its development in the near future.

Most players talk about stagnation in the home appliance and consumer electronics markets. They see no prerequisites for its marked growth. In this case, competition does not decrease. Therefore, according to David Borzilov, Sales Vice President for Svyaznoy, it was noticeable in 2019 that large Internet players were expanding their marketing budgets. This trend, in his opinion, will continue in 2020.

In addition, players in the home appliance and electronics market say that marketplaces are playing an increasingly important role on it. They also take this into account when planning their development in 2020. For more detailed forecasts, see the RBC Pro survey.

Customer behavior: installment purchases and reasonable consumption

David Borzilov, Sales Vice President for Svyaznoy

“Customer preferences are changing. Not only discounts, but also Trade-in mechanics (purchase with a part of the new product price offset by the cost of the old one - “RBC Pro”), installment programs, as well as bundle products (kits) are very popular among them now.

More and more buyers are purchasing goods online. The trend is due to the development of omnichannel, which allows customers to purchase, pay and pick up goods wherever convenient. So, the buyer can come to the store, study the characteristics of the gadget, get advice and place an order. But at the same time, he can begin to study the assortment, for example, in a mobile application or on the website, and after placing the order, receive the goods in the nearest store or with the help of quick delivery home or to work. The share of purchases from mobile devices is growing. In addition, retailers get more and more modern technologies for interacting with customers. These are virtual loyalty cards and the ability to pay for goods using a QR code.”

Tatyana Skokova, Distribution Director, Wide-Profile Distribution Division, MERLION

“The main consumer trend, which is characteristic not only for our country, but also for the whole world, is the transition from “consumer itching” to reasonable consumption. Buyers no longer want to change gadgets at the same speed as new models appear on the market. They think about the appropriateness of their use, as a result, the service life of devices increases. Yes, and new breakthrough technologies are not yet шт sight."

Vladimir Veselov, Commercial Director, Holodilnik.ru

“According to GFK, people go to banks: deposits are growing. Approximately the same decrease in activity is observed in the consumer electronics market. There can be many reasons for that: for example, people just do not want to buy more, or maybe there is a decline in the commissioning of new housing, etc.

In 2018 and 2019, smartphones were the only category that grew. Now they have gone down: by piece and by price. We can say that this category of goods has exhausted its potential. It is still difficult to say which other category could help the market gain positive momentum. One of the most “living” ones is dishwashers primarily built-in ones. But this is a relatively small volume, so it cannot significantly affect the dynamics of sales of the entire market of household appliances and electronics.

This year, the role of marketplaces in our market has been sharply indicated. They attract customers, and communication with consumers is shifting to their side. They engage people not only by assortment but also through work with loyalty - cashbacks, additional bonuses, free delivery, etc. There are more and more marketplaces, and 2020 will be marked by their development.”

Alexander Lozovsky, Director of the Citilink retail chain

“A common trend for all industry players is personalization. In order to remain competitive, companies need to be as compliant as possible, or better, to exceed consumer expectations. You need to make a detailed portrait of the target audience, find out its basic needs in order to move to a new level in this work. In conditions of a wide offer, buyers need the order to be completed promptly and delivered to the point of issue of orders no later than the next day. Therefore, it is important for players to give the target audience a better service than the current market does. It can be any improvement: expanding the range, prompt delivery, absence of delays or problems in the execution of the order, etc."

Konstantin Dessler, Distribution Director, Household Appliances and Electronics Division, MERLION

“The decline in the average bill and the shift in demand in the segments of B- and C-brands will continue. We attribute this to the fact that, starting in 2014, consumers spent their savings and reallocated family budgets. For example, from foreign holidays to the purchase of electronics in 2018. Then we saw a surge in purchases of large-diagonal TVs in connection with the World Cup and the transition to digital TV. After that, the growth in consumer lending stimulated demand, but since the summer of 2019, we have seen a slight decrease in sales for some representatives of the industry.”

Alexey Voevoda, Director of Marketing and Advertising, DNS

“Consumers in the market for household appliances and electronics, as we believe, are likely to maintain a rational model for selecting products, comparing offers from a variety of sellers and carefully weighing the need for each purchase.”

New technologies: smart home, 5G and others

David Borzilov, Sales Vice President for Svyaznoy

“Among the trends in technology retail, the launch of new retail store formats is worth noting. They become a place for new knowledge and impressions. Their visitors can, for example, go to a special zone to test devices for a “smart” home using voice commands: a “smart” Yandex.Station speaker, a smart socket, a remote control, various types of sensors. Expanding the assortment of such products is also a current trend.”

Alexey Gribovsky, General Manager of the Positronica federal network of electronics stores

“This year, much attention has been paid to the development of 5G networks. Thanks to this, manufacturers began to release equipment, in particular smartphones that support such protocols. In 2020, I believe this direction will develop at an accelerated pace.

The Wi-Fi 6 protocol will allow the network equipment market to grow. In the initial stage of the project development, these products will be purchased by corporate clients, but soon we will see growth in retail.

In 2019, we bet on increasing demand for smart home systems. Growth has occurred, but not as rapid as planned. But, according to our forecasts, it will be significant in 2020.”

Vladimir Veselov, Commercial Director, Holodilnik.ru

“The idea of a smart home has been designated a trend for five years now, but so far, as it seems to me, this is an enthusiastic market. Even now, you can combine a refrigerator, washing machine, stove, microwave, etc. into one control system. But if you want to make a full-fledged smart home, you need to completely change the product model range. Or chip existing technology, which is simply impossible on some products.

The smart home in its full understanding will become the main trend when the generation of household appliances changes. I think, it will happen in about five years. So far, the presenting systems are rather fragmented and communicate with each other using complex software solutions. A single format for everyone does not yet exist. Each company is developing its own smart home - Google separately, Apple separately, etc."

Regulatory Initiatives: Labeling and Development of Internet Commerce

Tatyana Skokova, Distribution Director, Wide-Profile Distribution Division, MERLION

“Regulatory initiatives such as product labeling will have an impact on the market. Photographic equipment, for example, will need to be labeled without fail in 2020. This will streamline the market and create difficulties for the sale of goods of so-called gray import, which will generally positively influence both the business of key market players and buyers who receive goods of decent quality with an official manufacturer’s guarantee.

The second initiative which we are closely following is the introduction of a law on the mandatory pre-installation of domestic software on electronic devices. The benefits and advantages of such an innovation are not yet obvious either for manufacturers and sellers of electronics, or for most developers of Russian software.

Nevertheless, the digitalization of the economy as a whole (and it should be noted that Russia is one of the leaders in this direction) allows us to hope for an increase in demand for modern equipment in the segment of small and medium-sized businesses.”

Alexey Gribovsky, General Manager of the Positronica federal network of electronics stores

“In 2020, the law on mandatory labeling of cameras and flash lamps came into force. This initiative will reduce sales of so-called gray goods and protect buyers. Against this background, “white” sellers and shops will feel more confident.”

Vladimir Veselov, Commercial Director, Holodilnik.ru

“Duty-free thresholds for cross-border trade are changing, and this may affect the sales of smartphones, at least some brands. They can go up in price. Other categories of goods will not be affected much by changes.”

Konstantin Dessler, Distribution Director, Household Appliances and Electronics Division, MERLION

“The regulator’s initiatives on the need for Russian software for smart devices (including televisions) can lead to market redistribution towards local assembly. It may also slow down the prospects for the development of IoT and AI technologies in our country.”

Alexander Lozovsky, Director of the Citilink retail chain

“In online retail, the main event that could affect the entire segment development will be the legalization of online trading in new areas, such as medicines and alcohol. A recent government decree on Internet jewelry trading will also stimulate the market to develop next year. We agree with market experts who predict an increase in the online trading market by 25-30% per year. New categories of goods will have a positive impact on the entire market, their appearance will expand the consumer experience and attract new customers who have not previously used online stores.”

Market Development: Consolidation and Redistribution of Roles

Vladimir Veselov, Commercial Director, Holodilnik.ru

“The market has not grown for the second year in a row, and there is a feeling that this will continue in the future, perhaps even with a slight minus. I do not see global prerequisites for changing this trend. The average check growth exhausted itself in July 2019.

There are few large players in the market, and there is essentially no one to leave. There was a small free field on the Internet, but it was filled. The market for players who work officially under Russian law has matured. Their leaders have been determined there, and most likely there will not be new players there. You can expect enlargement of old players, as well as the creation of new marketplaces. Many financially strong structures have thrown themselves into the development of the latter and will invest a lot of money in them for some time. Small players outside the legal field in this market periodically appear and disappear at the level of constant white noise.”

Konstantin Dessler, Distribution Director, Household Appliances and Electronics Division, MERLION

“There are changes in the sales channels. There is a serious consolidation of regional retail, redistribution of shares between retail players in the regions.

In the segment of sales of household appliances and electronics in 2020, the share of retail continues to grow. Moreover, in addition to specialized players (M.Video, Citilink), non-core sites, such as Ozon and Wildberries, show a significant increase in electronics sales. Marketplaces also show serious growth in sales of goods in this category.”

Alexey Voevoda, Director of Marketing and Advertising, DNS

“We optimistically expect weak growth from the market in the range of 0-10%, and whether some events will affect key players or not, depends on themselves, or rather, on their safety margin to take advantage of the opportunities and cope with the pressure of circumstances."