Consumer Market Sales at a Crossroads
Will consumer market sales pickup again in 2014 and 2015?
Bishop tracks 11 companies in the consumer market sector. For the full year 2012, these companies’ combined consumer market sales grew 4.5% year over year and had collective revenues of $475.9 billion.
Growth in the consumer market, as measured by Bishop, has been tepid in the last two years, with year-over-year growth of -1% in 2011 and 4.5% in 2012. In the first three quarters of 2013, these companies’ sales grew 4.2% year over year. 1Q13 grew 4.6%, 2Q13 increased 7.4% year over year, and third quarter increased 0.7%. From Bishop forecasts, we expect the consumer market for cable assemblies to grow in 2013.
Bishop tracks 13 market sectors for electronic interconnects sales trends. The combined annual revenue of all the market sectors was $4.3 trillion in 2012 and grew 4.9% over 2011. Of the 13 market sectors, consumer was the fifth-fastest growing market sector in 2012 at 4.5% year over year with combined revenues of $475.9 billion. Profitability was $4.8 billion at 1% of sales.
For the first three quarters of 2013, Samsung had the largest increase in sales at 23.7% year over year. Much of Samsung’s growth this year has come from its mid- to low-end smartphone sales in developing countries, which have also contributed more to the bottom line. Profits also improved for the memory semiconductor products. Samsung, of course, also sells everything from refrigerators to tablets and flat-screen TVs. Third quarter sales were a record $55 billion.
LG had the second-highest growth in the first three quarters, with sales up 19.4% year over year. For flat-screen TVs, LG noted that sales were up in Asia and Commonwealth of Independent States, though down in Europe. For smartphones, sales were up 24% year over year, but profits were down due to marketing expenses for the G2 and price competition. Appliance sales were up 3% year over year and the company expects further improvement in 4Q13 as the economies in North America and Europe strengthen.
Harman International grew 7.3% in the first three quarters of 2013 over 2012. In 3Q13, it grew 14.1% in infotainment systems for automotive; 14.4% in lifestyle products, which are branded audio systems for automotive and the home; and 36.8% in its professional audio products.
Kodak had the largest year-over-year loss for the first three quarters of 2013, at -35.1%. Kodak continues to decline in sales as it converts itself into a B2B imaging company.
Apple’s iPod sales declined 26.5% year-to-date. The iPod is losing market position due to the increasing popularity of smartphones, which can also store music and video files.
Nintendo contracted -19.1% in the first three quarters of 2013. Standalone video games continue to lose share to games on mobile devices.
The following table shows the results for the 11 companies we track in this market sector.
As can be seen in the following chart, year-over-year sales have grown in the last seven quarters. Sequentially, third quarter 2013 sales increased 0.7% from the second quarter of 2013.
Trends in the Consumer Industry
- The consumer electronics market has seen significant changes in the last few years. Instead of limiting oneself to an e-reader, consumers are now buying more capable tablets. Instead of buying an iPod for music, consumers are getting that capability on their smartphones.
- The use of I/O cable assemblies in consumer electronics has diminished significantly, as many devices have gone to wireless connectivity.
- The market for appliances has been picking up in North America and Asia. The market in Europe has been very slow. If the economic recovery in Europe continues, sales will probably pick up, as there must be significant pent-up demand.
- Sales of semiconductor products have picked up significantly over the past five months. Growth in the high single digits has been recorded. This is a leading indicator for connectors and cables assemblies, which bodes well for the beginning of 2014.
Bishop & Associates projects the worldwide market for consumer cable assemblies to grow 2.5% in 2014 to $6.1 billion. At 7.1% year-over-year growth, North America will be the fastest-growing region in 2014 for this market sector.
For a complete forecast on connector sales by market and region of the world see Connector Industry Forecast report available now from Bishop & Associates.
Dave Pheteplace, VP, Bishop & Associates, Inc.
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