This article was originally published by Dalila Bouaziz.
GfK reports on online sales of technical and cultural goods between November 2019 and October 2020 in France.
At the end of October 2020, the technical goods market is on the rise, fuelled by growth in online sales. The Covid-19 pandemic and its consequences have changed the consumption habits of the French and strongly reshaped the market, in all technical goods universes (large and small household appliances - GEM and PEM, Telecom, consumer electronics - EGP, photo, computer and technologies - IT). E-commerce has naturally appeared as an alternative to the imposed shutdown of stores during the two periods of confinement, while offering a vector of growth in a situation of contraction in demand.
Thus, at the end of October 2020, purchases of technical goods made online, from traditional click & mortar or pure-players, represent a turnover of 6 billion euros (+21% growth). In this context, the importance of the Internet in transactions has also increased.
E-commerce has accounted for more than 28% of technical goods sales over the last 12 months, excluding marketplaces.
E-commerce has generated more than 28% of technical goods sales over the last 12 months, excluding marketplaces. This represents an increase of 4 points compared to the same period last year, all delivery modes combined (home, click & collect, drive). In April 2020, e-commerce for technical goods even represented up to 58% of sales by value, its highest level ever. At the same time, the marketplaces business is also growing. Revenues from Technical Goods recorded via GfK's LeaderPanel marketplaces grew by 12% at the end of October 2020. This dynamic is supported by almost all product universes, with IT and Consumer Electronics in the lead.
Since the beginning of the year, at the European level, the distribution landscape remains very heterogeneous, partly because of varying levels of digital maturity. However, in the face of the unprecedented situation of confinement, the online sector has recorded significant growth, notably in France, Italy and Spain, without reaching the levels of Germany or the United Kingdom. Growth in e-commerce in value terms was +51% in Italy and +59% in Spain. Growth was equally strong among 'digital-mature' consumers: +77% in the UK and +36% in Germany.
The e-commerce in search of all technical goods
Enhanced since the beginning of the year, due to the closures imposed on stores, online is gaining market share in most technical goods sectors. The strongest growth in online turnover is recorded in the PEM (+27%) and IT (+27%) sectors.
This growth can be observed in the reinforced weight of the Web channel on the Telecom side (+5pts of market share, or 31% of the turnover), the PEM (+5pts of market share, or 26% of the turnover). The improvement is slightly slower in IT (+4pts), despite the strong sales dynamics (+27%). This can be accounted for by history: IT purchases were already more oriented towards the Internet than the other sectors (35% of turnover). The EGP also continues its digitalization: +3pts of market share, the turnover generated at the end of October 2020 by online purchases increasing by +15%. Finally, the GEM universe, which is usually less sold on the Internet, is accelerating: +4pts of web market share and +17% in online turnover.
This change in habits can be observed across all product universes: the internet (including delivery, drive and click & collect) is becoming the main purchasing channel for electronic devices for 41% of the French, compared to 25% before the start of the pandemic, according to the GfK Consumer Pulse Covid-19 study (November 2020 wave). Buyers of household appliances seem particularly convinced. 38% of French people consider Internet as their main way to make their next PEM/GEM purchases compared to less than 1 in 4 previously.
Cultural goods: a varied impact of containment depending on the channels, categories and formats purchased
The market for new physical cultural goods includes four product categories: books, interactive entertainment, video and music. At the end of October 2020, sales of cultural goods amounted to 5.6 billion euros over 12 months, a decrease of 6% compared to last year. The scale of the decline is particularly sharp compared with the previous three years, when the trend ranged between -4% and +2% over the same period.
This of course is related to the confinement and the drop in activity linked to the closure of points of sale. The beginning of 2020 has not been dynamic and the market was already showing a 6% decline. Confinement has strongly reinforced this trend: the market has lost almost half of its value in 2 months (-47%).
On the whole, over 12 months of activity, 21% of spending on cultural goods is carried out on the Internet, 3 extra points compared to last year. However, the Internet's effectiveness in capturing French people's spending on cultural goods varies according to category: while books are lagging behind, online purchases for video, video games and music have risen by up to 28% over 12 months of activity.
During confinement, the balance sheet of e-commerce cultural goods presents a paradox.
On the one hand, the Internet channel has not massively recruited buyers. The channel brought together 3.1 million buyers of cultural goods over the period, a decline of -16% compared to the previous year. However, the loss of customers is far below the market (-57%).
On the other hand, the weight of the internet is also increasing due to the rise in the average online shopping cart. Indeed, buyers spent an average of €36 on cultural goods on the Internet during the confinement, that is to say +8€ compared to the same period in 2019. The target of buyers on e-commerce websites has changed under the influence of the confinement: younger and more male than the typical buyer of cultural goods, more families as well. Thus, 48% of the buyers of cultural goods on the Internet during the period lived with children (+4 points vs. 2019).
An improvement after the 1st confinement
There has been an upturn in sales for all circuits since the release of the first confinement, with a 6% increase in turnover. However, this increase remains insufficient to make up for the losses of the confinement. It has boosted the interactive leisure market, the reopening of points of sale and the book market. Confinement did not have the same impact according to the categories of cultural goods: before, only books were in positive growth (+1% in sales); interactive leisure began the year at -24% in sales for consoles. This market situation was consistent with the release of Next Gen models planned for the second half of the year. In fact, the overall interactive entertainment market (consoles, games and accessories) posted a 19% decline in sales. Music and Physical Video showed a decline in activity, following the same trends as in previous years.
Following the confinement, the book regains color, with a turnover of +11%. Sales were driven in particular by the postponed June releases of some best-seller regulars. The interactive entertainment market remains in the green, with sales up 4%, despite the release of Generation 9 consoles in the last quarter.
Overall, at the end of October 2020, the market for cultural goods was down -6%. Only Interactive Leisure managed to hold its own, with revenues at the same level as last year. Books limited the downward impact with a turnover of -4%. In the absence of stores, not only have some consumers turned to the Internet to make their purchases of new physical cultural goods, but they have also switched to the digital format for their "cultural consumption". This is particularly noticeable for streaming video and music.
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