Electrical goods retailers seen in fewer numbers
Sales of electrical and electronic appliances have seen a boom in recent years, but are now growing at a slower pace, according to a study by business research company ICAP. The average rate of growth was 5.1 percent in the 1997-2005 period and 3.5 percent in 2003-2005. In 2005 the rate fell to 2.9 percent and is projected to be 2-3 percent for this year and next. The study points to three main factors that have shaped the sector during the period reviewed: strong competition in the form of prices, offers and credit facilities; the concentration of market share among the big chains; and the entry into the Greek market of three big foreign chains, Dixons, Media Markt and FNAC. The compression of profit margins has intensified the competitive climate, which has in turn worsened the financial situation of many small retailers. The big chains, for their part, have tapped their potential for economies of scale, being able to buy or import at better terms, and have followed an aggressive pricing policy. The study found that the white goods market segment is nearer saturation point and has a lower replacement frequency. Brown appliances, on the other hand, are more frequently replaced as they are subject to a faster rate of technological change. The air-conditioning market segment, as expected, shows high seasonal fluctuations, directly affected by weather conditions. A big chunk of demand is accounted for by appliances of new technologies, such as plasma and LCD television sets, DVD recorders, video cameras that use mini-hard disks and wide panel video projectors, and is mainly covered by the big chains. Overall, the size of the Greek electrical and electronic appliances market is considered too small to maintain the present number of retail chains. According to traders, their number is projected to shrink to four or five by 2010, with many of the smaller operators being absorbed. Any alliances between smaller and larger operators will be based on covering geographical market vacuums.
