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Hibernation Economy Helping CE & Appliance Retailers

Consumers who have taken to hibernating, working from home and stocking up on food in Australia are driving CE and appliance sales according to retailers.

Last week Harvey Norman was in the market for upright freezers “at any cost” this led to several branded and house brand suppliers looking at ways to get new stock into the Country with retailers such as The Good Guys Bing Lee and Betta Electrical now in the market for any form of freezers after consumers stripped shelves of food at Coles and Woolworths.

According to Bruce Thierbach General Manager at Melbourne distributor Audio Active custom installers are now witnessing demand for premium home theatre gear.
“Custom installers are reporting that orders that were on hold are now being activated as consumers take to staying at home and want a premium home theatre set up”, he said.

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Both JB Hi Fi and The Good Guys have seen a spike in demand for TV’s especially large sized TV’s.

‘The big problem is going to be supply” said one retailer who predicts that due to the falling dollar consumers who are considering a new TV “to get in now” before there is no stock or the price goes up by over 10%.

Samsung has assured ChannelNews that they are confident of supply while LG has not returned telephone calls.

TV brands that are set to suffer are Blaupunkt and Seiki who are having to rebate retailers for returns on returned stock that consumers claim to be “faulty” as well as JVC and Chinese brand Hisense.

TCL is also set to come under pressure due to supply issues.

“In some cases, the issue is not the components, it’s getting hold of cardboard packaging to pack a TV in” said one TV manufacturer.

Tempo a major supplier of TV’s to JB Hi Fi, Big W and Aldi has more than $20M worth of stock about to arrive in Australia.

One brand that does have stock of premium TV’s is European TV maker Loewe who recently underwent a major restructuring and buyout.

Local distributor Indi Imports claims that Rio Sound and Vision stores as well as local stockists of Loewe TV’s in Australia have seen a surge in demand for TV’s. (Indi Imports own the Rio Sound & Vision stores).

CEO Paul Riachi said that Loewe is benefitting from the fact that their manufacturing plants are in Europe and that prior to Christmas when Loewe was taken over by new management the Company ordered millions of dollars’ worth of panels.

“This supply and the fact that their components are made in Europe has helped us with supply. Recently we took delivery of $6M worth of Loewe TV’s and this will help the specialist channel in Australia who will struggle to get supply from mass market brands such as Samsung, Hisense and LG as they will priortise their larger clients” he said.

He also said that he has been taking calls from mass market CE retailers who are “desperate for consistent supply” of TV’s and sound gear.

Analysts are predicting that a ‘The hibernation or homebody economy ’ is set to boom with stay at home consumers taking to consumer electronic goods and appliances as well as new PC’s which are already in short supply.

“If retailers can get stock, they will do a brisk trade, and this will help their revenues” one IDC analyst said.

Analysts are also claiming that a falling dollar could see price rises with consumers tipped to accept the price rises for entertainment hardware and streaming services where the base rate is in US dollars.

“What consumers spent on going out they are now putting that money into other home entertainment products” a GFK analyst said.
Also up is demand for streaming services.

Although Foxtel, Netflix and Stan have seen increases in demand for streaming content during the past two weeks, analysts are tipping that this could be short lived if consumers start losing their jobs they claim a move the Federal Coalition Government is targetting in an effort to avoid unemployment.

While the likes of Netflix have, fared better than most public companies during the coronavirus outbreak, one analyst points out that the situation is bad for the likes of Netflix because Coronavirus could affect its international growth.

The term “homebody economy” was invoked in the USA in 2018 to describe the phenomenon of (generally) young women who like to stay at home, lounge in bed, and do what society likes to call “Netflix and chill.”

That demographic of the stay-at-homers, at least in 2020, has changed, as people of all ages and genders are encouraged to rest up if they feel ill.

While the broader market is tumbling, stocks for the homebody economy, which include the video-conferencing service Zoom, home fitness makers, and technology companies like Netflix, are rising, Yahoo Finance reported last week.

The stock market is forward-looking, Yglesias wrote. “In other words, stocks fall not because bad things have happened to companies but because there is good reason to believe that bad things will happen in the future.”

Rising stocks might not be an accurate indicator of how these companies will perform in the long run (or if people are buying more Netflix subscriptions), but it does reveal that investors think Zoom’s, Netflix’s, or JB Hi Fi’s short-term outlook is bright and profitable.

On Friday JB Hi Fi shares climbed 8.5% as the ASX staged a recovery.

JB Hi Fi are also benefitting from a flight to e-commerce sites and delivery providers as well as news that China is in recovery mode and that supply could improve significantly in coming weeks.

Forbes recently reported that as cases of the COVID-19 outbreak appear to be moderating in China, the country is working rapidly to get industry up and running again and that one key category is consumer electronics and appliances.

Many of the checkpoints have been eliminated and workers and companies are restarting factories as workers are able to return to work.

In many cases, workers that have returned from holiday are being asked to self-quarantine at home before returning to work.
This, combined with the requirements to put decontamination and safety procedures in place, represent a slow ramp of Chinese manufacturing over at least the next month.

Thus far, the electronics industry has been spared any significant impact because of the run up of inventories prior to the Chinese New Year holiday and the diversification of resources and manufacturing over the past year due to the China-US trade war.

However, even as China’s manufacturing engine ramps, it may be a few months before things normalize and that may have significant ramifications for the tech industry.

While manpower was the most pressing issue with ramping China manufacturing, shipping may prove to be an even greater issue. Shipping between facilities in China appears to be easing along with the movement of people, but international shipping remains bottled up with ports in China clogged while other ports around the world are underutilised.

Amazon, the largest virtual marketplace in the US, is a company that’s arguably poised to benefit the most from the pandemic. In Australia the site is not seen as mainstream with Amazon approaching several brands to take back CE stock that is not selling according to industry sources.

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