IFA Berlin is already sold out. More companies have submitted applications for space than space exists, says Dr. Christian Goeke, COO, Messe Berlin (photo top left).
Until the new Hall 15 goes up in 2015, IFA will be a show filled to its limit...and then some as the organizer looks for temporary solutions to accommodate. That’s 140,000 sqm of exhibits plus whatever extra space can be shoe-horned into IFA by using outdoor tents and other temporary buildings.
Part of the pressure comes from the growing number of Asian exhibitors. The more robust appliance business also clamours for space. And in consumer electronics, the growth is in mobile devices and accessories as well as the Apple ecosystem.
That's one of the main messages we took from the IFA Global Press Conference in Dubrovnik this year.
But that's not the only message.
GfK's Global Director Consumer Electronics Juergen Boyny (photo, bottom left) shared the most recent industry statistics. While appliances will see some growth, consumer electronics is not that lucky. Europe will be flat and is probably lucky if even that modest that projection holds up. Eastern Europe will fare better, but it’s not enough to hold up the drop in Western Europe.
In contrast to Europe, the Middle East/Africa market will see about 13% growth in value.
If you separate the new tablet category which is already 6% of the projected CE sales in 2012, PC sales will be negative this year. Flat is no longer enough reason to buy a TV and TV sales will sail in doldrums for the whole year. Smartphones (mainly a two company race) will grow but are under pressure from other mobile devices.
German industry leader Dr. Rainer Hecker, Chairman on the Supervisory Board of gfu, underlined the real problem in his speech to the press: the industry must move from value destruction to value oriented. We can no longer sell price as the main attraction. Business must be profitable.
And clearly, as attested by GfK statistics, the CE business is not profitable for most (or shall we say, “overall”). The reason, says Hecker, is the industry sells mainly on price. And that strategy only takes you to one destination: the Ground Zero of profitability.
Blame Asia with its built-in cycles of declining price as part of their marketing plans, but plenty of Europeans and Americans (in competition with Asia) also embrace price as their main marketing banner.
That philosophy, which once propelled CE into a hundred billion dollar business worldwide, seems today to turn the industry into a cut-throat, deadly business. Whatever you knew a couple of years ago, says Boyny, is no longer true about today's industry.
Even the changes in the last two months have shifted the CE world as we knew it. If nature wasn't the only foe that Japan faced, now Japan must respond to the tsunami of unprofitability that washes over its major CE conglomerates.
But the damage is not only in Japan. Certain factors now shape our CE industry, argues Boyny.
- First the Internet has changed the purchasing habits of the consumer, arming buyers with information. This “transparency” empowers the consumer.
- Second, the products change as we witness upheaval from tablets and the rise of smartphones as the major interface for accessing Internet.
- Third, these first two changes create change in the retail scene. Without retail the CE industry would have had no route to market... today GfK estimates 15% of the CE business is sold via e-tailers. And while that rise may be slowing, it has not yet topped out.
Being “sceptical”, the press sometimes easily dismisses the value of press outings. Clearly the IFA Global Press Conference is at the wrong time of year (unlike IFA itself) for exciting new product introductions. The value of the IFA Global Press Conference to the press should become clearer when the industry faces such critical times: IFA gives the press a platform to focus on an industry overview, to understand the "big picture."
The question is whether or not the consumer press can take advantage of this forum...or whether they too will succumb to years of habit, to years of directing the public interest to price as the main attraction.
Go IFA Berlin
