Major CE Stock Shortages Up To September Set To Affect Retailers

Is CE and appliance retailing entering a twilight zone driven more by a shortage of stock than a shortage of customers wanting to buy.

Like-for-like sales growth in the March quarter was 11.3% at JB Hi-Fi and 13.9% at The Good Guys and the company has flagged strong sales for April and early May but that is when the twilight zone will kick in with an audit by ChannelNews of major suppliers to the consumer electronics retailers revealing that there is set to be major stock shortages right through until September when the market is set to stage a recovery.

The Nintendo Switch has sold out almost everywhere as well as online, Sony, Hisense, TCL have no TV’s coming in the short term even JB Hi Fi FFalcon TV’s are on back order.

Gartner claims tech spending in Australia is likely to fall six percent to A$88.8 billion in 2020, market research outfit Gartner has predicted in its latest forecast on global IT spending.

Across the world, Gartner expects IT spending will reach U$3.4 trillion in 2020, an eight percent drop from 2019, due to effects of the coronavirus.

In Australia, Gartner predicts the biggest falls will be in devices such as PCs, tablets, smartphones and datacentre technologies.

Datacentre spending is tipped to drop 12.8pc; enterprise software 3.6pc; devices down 14.8pc, IT services 4.8pc and communications services 3.9pc.

One bright spot globally, according to Gartner analyst John-David Lovelock, is public cloud services, including telephony, messaging and conferencing. This is likely to grow between 8.9 and 24.3pc, reflecting moves to promote remote working.

Also facing problems are PC manufacturers as well as suppliers of accessories such as webcams and work at home desks. European appliance manufacturers are also struggling to get back production with key ports such as Rotterdam reporting a “massive” slowdown in European exports of electrical goods from European factories.

With global supply chains reacting to the rapid spread of the coronavirus, or COVID-19, stock shortages of numerous goods are expected between now and September claims GFK executives.

This is due in part to factory closures and the setting up of factories across Asia and Europe so that workers are not impacted by the virus this in some cases is slowing down output by as much as 50%. Deep cleaning is another issue for factories followed by limited freight and transport with air travel restricted and shipping struggling to handle quarantine restrictions resulting in the slow turn around of shipping containers.

Retailers are also facing a China backlash with consumers unhappy about the bans that the Communist run Country is placing on Australian goods, this claim analysts will see demand for goods from many Countries other than China.

As shops start to reopen in Australia GFK claims that concerns about contagion, combined with sweeping restrictions are driving many shoppers deeper into eCommerce.

As of mid-April 28% of consumers said they were making online purchases in order to avoid going to a physical store, more than double the share who said so two weeks earlier. COVID-19 consumer behaviours may “stick” long after the crisis ends.

Stores that have remained open such as JB Hi Fi, Harvey Norman and The Good Guys, are doing their best to safeguard employers and customers by offering pick up services.

The economic impact of the coronavirus pandemic will be huge, and it will last a while. The IMF is now projecting “a recession at least as bad as during the global financial crisis or worse.

In Australia where consumers believe that we are better off than the USA and Europe consumer confidence surged in May, making its biggest monthly gain since the Westpac-Melbourne Institute Index of Consumer Sentiment began nearly 50 years ago.

The phone survey of 1200 Australians took place as politicians began talking about easing COVID-19 lockdown restrictions, and resulted in the index rebounding 16.4 per cent to 88.1 in May from an extremely weak 75.6 read in April.

“Consumers are clearly heartened by Australia’s success in containing the coronavirus, which has justified the easing of some of the social restrictions that have been so painful for individuals and the economy over the last two months,” Westpac Chief Economist Bill Evans said.

GFL claims that during the Great Recession of 2008, people were quick to cut back on a host of discretionary expenses such as eating out and travel, and they continued to do so for several years. They also turned to a variety of saving strategies such as using coupons and waiting for sales.

Recent lockdowns have already forced other COVID-19 consumer behaviours – such as allocating fewer dollars for out-of-home entertainment, and money woes may exacerbate that trend once the health crisis has waned. At the same time, past experience shows that people will spend when they can, which is why job protection is a critical element of crisis management.

COVID-19 consumer behaviour will be the new normal and life after the coronavirus pandemic will emerge as a new normal. In many ways, life will go on as usual, but it is also likely to change. Some health behaviours may be permanently altered. Some technology solutions activated during the crisis will become entrenched the European research group claims.