The Kingdom has experienced its first ever fourth consecutive quarterly decline in the Technical Market Index. The Q3 2013 results reveal a decline of 4.3 percent compared to the previous quarter, Q2 2013. Although this is a substantial drop in percentage terms, the quarter’s value remains above SR12 billion.
Small domestic appliances (SDA): Encouraging outcome
SDA recorded a growth in Q3 of 8.5 percent versus the same period last year. Seasonal promotions could be cited as reasons for this increased performance.
The demand has increased for hot beverage makers, hair care, personal care, fryers, air treatment and kitchen appliances. The performance of meat mincers, vacuum cleaners and irons has however shown a reverse trend. Close to one-third of the revenue for the sector comes from the food preparation category, while the remaining PG’s generate slightly higher than two-thirds of the SDA revenue with the major contribution coming from vacuum cleaners.
Major domestic appliances: Decreased value performance
MDA posted a decline of -7.1 percent versus the same quarter last year and currently accounts for SR1.58 billion.. The biggest contributor to the sector, cooling, is posting a growth of 10 percent, with freezers having grown by 42 percent. The smallest contributors, dishwashers and tumble dryers, posted a growth of 17 percent and 13 percent, respectively.
Telecommunications: Telecom declines by 11 percent in Q3 2013
Q3 2013 sees the telecom market to be in decline by 10 percent. Mobile phones value decreased by 60 percent last year, the smartphones category also sees a drop by 3 percent in this quarter compared to the same quarter last year. Smartphones continue to provide value to the telecom sector with its dynamic features. Dual SIM smart phones have an ASP of SR750 — this is higher than in Q3 2012. Decline of 3G and subsequent growth of 4G is also successfully adding a healthy 22 percent value to smartphones. Gravitating toward higher specifications in smartphones, even though the ASP of 7MP smart phones has not undergone any change, we still find the segment to be in growth. Additionally, larger screen sizes are witnessing positive results with a 40 percent share in the market. In terms of pricing, premium price-points face stiff competition from mid-range and SR375 segments, which register good increases last year. Mobile phones continue to gather sustenance through dual SIM feature, which has doubled its value share from Q3 2012. Pricing under SR150 and essential features continue to be the main strengths for mobile phones’ determined endurance.
The photo sector reached a sales value of SR240 million for Q3 2013, which was a 13 percent drop in comparison to the same quarter last year. The shift in popularity from compact to SLR has also continued through this quarter. While the compact camera segment declined by almost 30 percent for Q3, the SLR increased its sales value by over 30 percent.
The Wi-Fi enabled smart cameras offering better connectivity have been embraced by Saudi consumers with 5X growth for the quarter over last year.
Information technology: Market challenges reflected in IT performance
The IT sector is recording a slight 1.5 percent value growth for the year to date (January-September 2013-2012) with sales of SR 7.7 billion.
Media tablets remain the key driver, even though the latest quarter is showing a significant slowdown. This is largely due the shift of consumer spend toward entry level models.
Mobile computing, despite remaining the highest value sector, is facing the most challenging period. The category is showing an additional reduction of 3 percent compared to Q2 2013. Volume growth remains in the entry level, SR1500, whereas models selling SR2,500 are showing a 32 percent decline when comparing Q3 2013 to Q3 2012.
Monitors (-20 percent), keying devices (-15 percent) and pointing devices (-11 percent) are all recording a year on year value decline to various degrees (Q3 2013-2012). Desk computing continues to maintain the majority of its value sales with consistent volume sales of traditional desk solutions below SR1,500 being a key driver.
Office equipment and consumables: Laser multifunction hardware providing growth in challenged office market
The office equipment and consumables sector continues to register a decline, with year on year value dropping by 15 percent. The quarterly value sales of Inkjet cartridges have fallen below SR 0 million representing a 33 percent year on year decline (Q3 2013-2012). Laser multifunction device market offers a potential growth opportunity as value sales continue to increase, +20 percent in the latest quarter versus Q3 2012.
Consumer electronics: LED TV and headphones grow while the overall sector declines
Consumer electronics closed at SR1.3 billion, which was around 23 percent lower than the same quarter last year.
LED TVs continued their upward trend with 26 percent growth for the quarter on last year. The consumer’s interest has further shifted toward buying bigger TVs with 60+ inch size, having their sales value double for Q3.
Both the audio home systems and DVD player recorder category had a double digit drop in sales value for the quarter. However the Blu-Ray feature within the audio home systems saw a strong growth of 60 percent over the same quarter last year.
The headphone product category continued its consistent growth with a 44 percent rise in sales value. This product’s growth is driven by the increasing popularity of wired headband segment. The multi technical goods group, which consists of DVD recording media, USB memory, and memory cards had a weak Q3 with sales value dropping by double digits.
The video gaming consoles, which form the second largest consumer electronics product market in KSA, had a double digit drop coming from both home and portable consoles. It would be interesting to see how this category performs in Q4 2013 with upcoming launches of the next-gen home consoles.
GfK TEMAX Saudi Arabia: Socioeconomic factors have an impact. Among the seven reported sectors only one, SDA, can show a year on year growth.
The decline this quarter can be attributed to two main reasons. The ongoing campaign by the Ministry of Labor to rid itself of undocumented immigrants or non-compliant foreign workers — a measure that has led to 800,000 foreigners either leaving the Kingdom or being deported. The second reason is the considerable drop of foreign pilgrims traveling to Saudi Arabia to perform Umrah. According to Arab News, the number of foreign pilgrims during Ramadan in 2013 was 5 million compared to 6 million in 2012.
Technical Market Index remains above SR12bn
