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Day 5 - IFA International

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trade news twIn trends

trade news twIn trends BrInG LIFeLIne tO retaIL MarKet werner wInKeLMann, presIdent OF eUrOnICs InternatIOnaL, eXpLaIns HOw tHe eUrOpe-wIde CHaIn Has staYed aHead OF tHe CUrVe By Emmanuel Poidevin & Mark Dezzani Werner Winkelmann, President of Euronics International The retail sector has been reeling in the recession, but the twin trends of cocooning and wellbeing have provided lifelines for the consumer electronics and home appliances industries. With more people investing in quality lifestyle products for the home, Euronics President Werner Winkelmann tells IFA International about these trends and future prospects from the all important dealer and retail perspective. He also reveals how Euronics’ emphasis on training, added value products and customer support have kept the Europe-wide chain ahead of the curve and well placed to profit from better times ahead. The market has registered a significant drop in the first half of this year. What is your forecast for the balance sheet at the end of 2009? The global market for the first half of 2009 registered a 12% drop in revenues against the same period last year, with Euronics down 11%. But we expect to recuperate some of that in the last quarter and we are projecting a 9% drop for the whole of 2009 with revenues of €13.1 billion against €14.4 billion in 2008. Russia and the Baltic states have been especially hit because of the drop in the exchange rate of the rouble, the difficult availability of consumer credit and a lack of personal savings. So what are Euronics plans in Eastern Europe? The situation in Eastern Europe has been especially affected by the economic crisis and all of the dealers there have suffered. Since the Eastern European countries adopted the western economic model, this is the first time that they have experienced this type of economic impact. So we are waiting to see how things develop and for the situation to consolidate before considering entering these markets. However, we are keeping an eye on developments in Romania, Ukraine and Turkey and assessing who could be the right partners there. There has been a significant change in 30 www.ifa-international.org IFA International • Tuesday, 8 th September 2009

trade news consumer trends in the US market with consumers focussing more on essentials. What are the consumer trends in Europe? There are two major trends in Western Europe - cocooning and wellbeing. The secret behind the relatively healthy market in Germany, Switzerland and Austria is the cocooning effect and that is spreading elsewhere. With the consumer tending to spend more time at home, they want to create the best conditions and are therefore investing in quality appliances and goods. The wellbeing trend is very popular and is being promoted by phenomena such as TV cooking shows and a kind of new home society, with friends inviting each other to dinner and going from kitchen to kitchen. Ecological issues are also important, with the consumer now interested in energy efficiency. So when a consumer now looks at making a purchase, they factor in quality and not just the cheapest device available. They are looking for the best ratio between price and performance and are willing to pay a bit more. Is the boom in lifestyle appliances such as the coffee machine down to the wellbeing trend? Coffee machines are very popular, so popular in fact that some consumers are willing to pay up to €1,500 for the top models. It is interesting to examine the difference between the evaluation when purchasing a device such as a coffee machine and other types of products. With IT products, the configuration and specification are important while for mobile phones, consumers seek the best tariffs. TV sets require more support and recommendation from the dealer. When deciding on the purchase of a coffee machine however, the consumer looks at the design and even the type of coffee usable with the machine. So we have decided to sell coffee accessories in our stores alongside the machines, such as the coffee itself and additional aromas that you can find in coffee chains such as Starbucks. We supply our dealers with an entire coffee department with all the accessories and they find that this delivers considerable added value in sales. What is Euronics policy over shop layout with your individual dealers? We seek to have the best mix between recommendation and suggestion with our dealers, on how to create the best store layout and displays. One strong recommendation is that they implement our left and right aisle policy. This means that on the left side, they display products that are heavily advertised and promoted, while along the right side, they display products that need to be recommended and explained, such as smaller electrical appliances and those with added value. In Italy and Germany we have a more defined programme for our dealers that can be adapted to the size of the outlet. Euronics is well known for its dealer training programmes. Can you explain how important these are and how they operate? We place a lot of importance on interaction with our dealers, especially regarding training. We have established a quality sales programme offering twelve half-day courses a year with a maximum of twenty people on each course. The focus of these training sessions is on added value sales. This means finding out from the consumer their needs and requirements. For example, when purchasing a TV set, a consumer may not know that they may also want a set top box and a USB interface. Technology is becoming more complex and we need to find out from the customers their pattern of consuming TV, in which situations and their expectations. Then we can assist the client in making the purchase best suited for them. So we are not just about supplying the best price. We also want to provide the best solution for the consumer. What effect will the ageing of the population have on consumer requirements and trends? These days, the ‘over-50’ consumer still has more disposable income but they have a much more youthful mindset than the previous generation and are keen on stylish and contemporary design. Younger consumers criteria are different, placing less emphasis on design and more on the technical specification. Attracting the young consumer, however, is an important way to also reach the older consumer. Especially in family situations, the younger generation educate their elders to the new trends and technologies. At the retail level, how important are green considerations for the vendor and the customer? Unlike the manufacturer, we have no influence on production specifications, so our role in promoting greener appliances is our interface with the consumer. We can explain and inform on issues, such as energy consumption and efficiency. We can also explain new laws, such as those recently implemented on the replacement of old 100W light bulbs for new energyefficient ones. Another issue is that of the consumption of energy by appliances in standby mode. New appliances use considerably reduced energy in standby. For energy intensive appliances such as washing machines, we can explain to the consumer that a 10 year-old model should be replaced as it consumes much more water and energy. We can also tell them about the considerable savings that can be made by purchasing a new, more efficient model, with the outlay recuperated over a certain period. How important is IFA for Euronics? IFA is very important for the trade and our retailers. There is a lot of media here and they are the best way to inform consumers about new product trends. IFA is especially popular in Germany with the public and this is now spreading throughout Europe. We get that feedback from our international dealers. In fact, we urge our dealers to come to IFA to get informed about new products and we arrange our own guided tours for them around the trade fair. One of the highlights in Japan is for companies to have an annual convention and for our dealers IFA is our annual convention! Hall 23 / Stand 104 IFA International • Tuesday, 8 th September 2009 www.ifa-international.org 31

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