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GfK Market Insight Philippines June 2009


GfK Retail and Technology

7/2009

Content 2

1. Objective

4

2. Macroeconomic Information -

GDP Year-on-Year Growth

6

-

Inflation Rate Evolution

7

-

Unemployment Rate

8

-

Stock Market

9

-

Currency Exchange Rate

10

-

Consumer Confidence

11

3. Technology Market Trend -

Market Overview

-

Market Trend

13

- Total Market

18

- Consumer Electronics

23

- Home Appliance

26

- Telecom & Photo

29

Glossary Terms

32

Terms of Usage and Disclaimer

35


1

Objective


GfK Retail and Technology

7/2009

Objective 4

To monitor the sales trend of key market segments and products audited by GfK, together with the economic information of the country. These information are the key indicators of a country‘s development and would assist our valued partners to better manage their businesses.


2

Macroeconomic Information


GfK Retail and Technology

7/2009

Philippines - GDP Year-On-Year Growth 6

10 7.4 8

6

4.7

5 4.4

4.5

4

2

0.4

0 Q407

Q108

Q208

Source: Bangko Sentral ng Pilipinas / National Statistics Office (NSO)

Q308

Q408

Q109


GfK Retail and Technology

7/2009

Philippines - Inflation Rate Evolution 7

18 15 11.4 12

12.3 12.4 11.8

11.2 9.9

9.5 8.3

9

8.0

6.4 4.9

6 2.3 2.6 2.4 2.7 2.7

3.2

7.1 7.3

6.4

5.4

4.8

3.9

3.3 1.5

3 0

Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun07

07

07 07

07

07

07

08

08

08

08

Source: Bangko Sentral ng Pilipinas / National Statistics Office (NSO)

08

08

08

08

08

08

08

08

09

09

09

09

09

09


GfK Retail and Technology

7/2009

Philippines - Unemployment Rate 8

14 12 10 8.0 7.4

8

7.7

7.4 6.8

6.3 6 4 2 0 Q407

Q108

Q208

Source: Bangko Sentral ng Pilipinas / National Statistics Office (NSO)

Q308

Q408

Q109


GfK Retail and Technology

7/2009

Philippines - Stock Market 9

4500 4000 3500 3000 2500 2000 1500 1000 500 0 Jun-07

Sep-07

Dec-07

Mar-08

Jun-08

Sep-08

PSEI

Source: Yahoo Finance

Dec-08

Mar-09

Jun-09


GfK Retail and Technology

7/2009

Philippines – Currency Exchange Rate (PHP to USD interbank rate) 10

0.04 0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 Jun-08

Aug-08

Source: Oanda Corporation

Oct-08

Dec-08

Feb-09

Apr-09

Jun-09


GfK Retail and Technology

7/2009

Philippines - Consumer Confidence 11

120 96

100

78.4

80 60 40

83.1 74.4

67.7

58.6

57.5

48.1 36.2 28.7

23.1

35.5

37.3

52 43.4 38.1 41

29.3

37.5

35.4

43.2 40.0 40.5

23.3

20 0 Employment

Economy

Regular Income Q4 2007

Source: MasterCard Worldwide Index of Consumer Confidence

Q2 2008

Stock Market Q4 2008

Q2 2009

Quality of Life

Total Index


3

Technology Market Trend


GfK Retail and Technology

7/2009

Philippines – Market Overview 13

In the first quarter, the economy grew by a mere 0.4 percent - the slowest in 10 years - due to a slowdown in consumption and investments. The BANGKO SENTRAL NG PILIPINAS slashed its key policy rates by another 25 basis points in an effort to further boost the economy. The latest reduction brought overnight borrowing and lending rates to a record low of 4 percent and 6 percent, respectively.

Inflation rate continued to decline at 1.5%, the lowest since April 1987. Inflation a year ago was at 11.4%. Fuel prices reflected lethargic demand, with domestic prices falling from year-ago levels as Dubai oil prices dipped to US$69.40 a barrel in June from US$127.82 last year.

The peso showed signs of strength and is stable at an average of Php47.91. This boost was attributed to the surge OFW remittances in the country at US$1.48 billion (3.7% growth YOY) due to the opening of classes last June.


GfK Retail and Technology

7/2009

Philippines – Market Overview 14

Consumer confidence continued to slide due to the current economic conditions. According to The BANGKO SENTRAL NG PILIPINAS, consumer confidence index is now 8.5 index points lower than first quarter to negative 34.2%. This negative value was largely attributed to the middle-income consumers who believe they suffer the most from the ongoing economic slowdown.

We have seen flat sales of consumer electronics and home appliances for most of the big players in the retail industry during this month. June signaled the opening of classes which influenced the spending priorities of consumers towards school requirements of children such as tuition, books, supplies, uniforms, among others.

Retailers were fully aware of the effects of the economic crunch to the consumers, thus they helped the consumers by offering financing plans for their purchases of consumer electronics and home appliances. In-house financing was an effective strategy used by big retailers outside national capital region (NCR).


GfK Retail and Technology

7/2009

Philippines – Market Overview 15

Some chain/mass merchant retailers operating nationwide like SM Appliance have launched promotions like “Back to School Promos” which are in-line with the school opening.

The retail industry managed to cope with the tight economic condition through their innovation in sales and marketing practices.

The demand for Consumer Electronics (CE) dropped by 1% in terms of value and 2% in terms of units compared to the previous month. Compared to the same period last year, the demand dropped by 8% in value and 4% in units. Among the Consumer Electronics (CE) products, only LCD TV and Portable Media Player (MP3/MP4) posted positive growths at 4.5% and 2.6% in units, respectively as compared against May 2009. The growth in LCD TV sales was fueled by price slash in most stores with some stores selling branded 32-inch LCD TV at around PhP29,000. The increase in sales for Portable Media Player (MP3/MP4) was attributed to the huge demand for this product in the NCR region.


GfK Retail and Technology

7/2009

Philippines – Market Overview 16

• The demand for Major Domestic Appliances went down by 1.2% in units and 3% in value compared to the previous month. The onset of the rainy season ended the peak in demand for Air Conditioners, thus explaining the huge drop in sales at 7% from May to June. However, the advent of the rainy season pushed the demand for Washing Machines by 7%, helped largely by brand promotions during the month of June. Huge discounts (as much as 50% off) and bundle promotions for Microwave Ovens helped increase its sales by 9% from the previous month. • Demand for Digital Still Cameras suffered a decline from the previous month. This was attributed to the consumers’ shift in priority needs where expenditures were funneled towards the basic commodities, tuition fees, medical expenses and selected construction materials during the month.


GfK Retail and Technology

7/2009

Philippines – Market Overview 17

•

Mobile Phone retailers have experienced low customer traffic during this month mainly due to the shifting in priorities of consumers towards school needs of children like tuition, books, school supplies, uniforms, just to name a few. Marketing and promotions of Mobile Phone manufactures were actively seen in chain stores. Low end models were still in demand primarily because of the current economic crisis. Manufacturers were seen promoting their basic phones for the low end market in order to increase market share. Leading brands continue their aggressive promotions with one brand launching grand Mobile Phone sale in the region to increase market share. A new China player entered the market with cheap models with TV feature that can pick-up network channels. The major players continue to slug it out in the market by introducing new models with innovative and attractive features that cater mostly to the young generation.


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Total Sales Value % Jan 08-Jun 08 - Jun 09 Ja n 08-Jun 08 Ja n 09-Jun 09

33 31,3

18,5 21,7

Cons. Electronics

Philippine 18

Jun 08

Jul 08

Aug 08

Se p 08

Oct 08

No v 08

De c 08

Ja n 09

Fe b 09

Ma r 09

Apr 09

Ma y 09

Jun 09

31

31 31,8 31,6 33,6 33,7 32,3 33,1 32,2 31,3 30,6 30,7 29,8

16,9 17 17,1 18,1 19,7 19,9 19,1 19,5 17,4 17,9 26,6 24,1 22,2

Home Appliance

4,8

Telecom

4,1

41,2

Photo

4

45,4

Š by GfK-RT, www.gfkrt.com

4,2

4,2

4,4

4,4

4,7

4,6

4,9

4,5

4,7

5,3

4,9

4,3

46,1 45 46,2 45,8 44,5 44,4 46,7 41,7 44,5 44,6 43,7 40,8 38,4

PRJ 80109 / RG 1482919 / ID 54583526


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Total Growth vs last year Jan 09-Jun 09

Philippine 19 Sales Value <LC>

Total

Cons. Electronics

Home Appliance

-13,2

Telecom

Š by GfK-RT, www.gfkrt.com

-1,3

-17,7

-4,1

-5,1

-20

2,2

Price <LC>

-12

-13,3

-26,4

Photo

Sales Units

-8

3,9

10,4

-1,7

-13,1

PRJ 80109 / RG 1482919 / ID 54583527


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Total Growth vs last year Jun 09

Philippine 20 Sales Value <LC>

Total

Sales Units

-4,6

10,2

Cons. Electronics

-8,1

-4,1

Home Appliance

-31,6

-21,4

Photo

3,3

Telecom

16,2

Š by GfK-RT, www.gfkrt.com

Price <LC>

-13,4

-4,1

-12,9

12,2

27,6

-7,9

-9

PRJ 80109 / RG 1482919 / ID 54583528


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Total Sales Value % Ytd 2009

Philippine 21

Total

Cons. Electronics

Home Appliance

Photo

Telecom

Ytd 2008 Ytd 2009

Ytd 2008 Ytd 2009

Ytd 2008 Ytd 2009

Ytd 2008 Ytd 2009

Ytd 2008 Ytd 2009

8,8 16,6 17,2

12,1

6,1

7,2

7,3

10,3 29,2 25,6

INDEPENDENTS CHAINS/MM

83,4 82,8

91,2 87,9

93,9 92,8

92,7 89,7 70,8 74,4

Š by GfK-RT, www.gfkrt.com

PRJ 80109 / RG 1482919 / ID 54583529


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Total Sales Value % Ytd 2009

Philippine 22

Total

Cons. Electronics

Home Appliance

Photo

Telecom

Ytd 2008 Ytd 2009

Ytd 2008 Ytd 2009

Ytd 2008 Ytd 2009

Ytd 2008 Ytd 2009

Ytd 2008 Ytd 2009

9,5 5,4

7,6

10,5 10,5

4,7

6,1

18,2 20,6 6,3

20,5

6,3 CEBU

7,3

6,5

6,4

5,5

6,9

5,1 18,7 7,1

21,5

26,1

9,6

11,2

10,3

5,8

4,1

4,7

11

10

3,7

15,4

20,8

2,6

6,7

5,5

6,3

DAVAO

5,8

3,5

12,8

LUZON EX NCR MINDANAO EX DAV NCR VISAYAS EX CEBU

55,1 56,1

48,2 50,9

61,8 69,2 55,3

59,9 63,7

42,8

5,4

4,6

© by GfK-RT, www.gfkrt.com

7,4

7,7

4,8

5,1

5,2

2,9

4,1

2,5

PRJ 80109 / RG 1482919 / ID 54583530


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Cons. Electronics Sales Value % Jan 08-Jun 08 - Jun 09 Jan 08-Jun 08

11,9

11,6

Jan 09-Jun 09

Philippine 23

Jun 08

Jul 08

Aug 08

Sep 08

Oct 08

Nov 08

Dec 08

Jan 09

Feb 09

Mar 09

Apr 09

May 09

Jun 09

14,1 14,9 14,8 14,6 14,3 14,6 15 16,2 16,7 16,7 14,6 14,3 12,6

15,2

9,4

10,1

9

9,8

8,4

9

9,3

9,3

7,7

11,5 8,9 10,5 11,4 10,8

AUDIO HOME SYS. PORTABLE MEDIA PLAYER

37,7 47,5

CRT-TV PTV/FLAT LCD-TV

34,6 36,1 39,8 42,9 37,1 41,5 42,5 41,2 44,1 39,6 44,8 44,2 38,5

PTV/FLAT PLASMA PTV/FLAT OTHERS DVD-PLAYER/REC. CAMCORDER

28 19,7

23,1 22,9 22,4 24,1 24,5 27,3 26,1 25,7 28 21,5 21

1

1,1

5,6

6,4

2,2

1,6

© by GfK-RT, www.gfkrt.com

7,5 1,7

8,7

8,6

1,9

1,8

1,9

1,9

0,9

1

8,1

31,1 30,2

7,3

6,8

7

6,2

6,2

6,4

6,5

6,9

6,2

1,6

1,7

1,8

1,8

1,6

1,6

1,6

1,5

1,4

PRJ 80109 / RG 1482919 / ID 54583531


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Cons. Electronics Growth vs last year Jan 09-Jun 09

Philippine 24 Sales Value <LC>

Total

-17,7

AUDIO HOME SYS.

PORTABLE MEDIA PLAYER

CRT-TV

-28,1

-97,1

-39,4

-11

74,3

42,3

-94,6

-6,1

-32,8

-29,1

-46,8

2,9

-40,3

-13,6

-10,4

-26,8

0,9

DVD-PLAYER/REC.

© by GfK-RT, www.gfkrt.com

21,2

17,2

Price <LC>

-5,1

-19,7

-34,8

PTV/FLAT PLASMA

CAMCORDER

-13,3

4,7

PTV/FLAT LCD-TV

PTV/FLAT OTHERS

Sales Units

-8,7

1,4

PRJ 80109 / RG 1482919 / ID 54583532


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Cons. Electronics Growth vs last year Jun 09

Philippine 25 Sales Value <LC>

Total

AUDIO HOME SYS.

-8,1

-25,8

-78,2

DVD-PLAYER/REC.

-23

CAMCORDER

-23,3

15,4

-12,7

-15,1

76,7

85,4

PTV/FLAT OTHERS

-10,8

-2,4

28,9

PTV/FLAT PLASMA

Price <LC>

-4,1

-7,8

12,6

PTV/FLAT LCD-TV

© by GfK-RT, www.gfkrt.com

-4,1

-17,8

PORTABLE MEDIA PLAYER

CRT-TV

Sales Units

174,8

-65,6

-27,1

-32,5

-36,5

-0,2

-34,7

-22,9

17,4

PRJ 80109 / RG 1482919 / ID 54583533


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Home Appliance Sales Value % Jan 08-Jun 08 - Jun 09 Jan 08-Jun 08Ja n 09-Jun 09

Philippine 26

Jun 08

Jul 08

Aug 08

Se p 08

Oct 08

No v 08

D e c 08

Jan 09

Fe b 09

Ma r 09

Apr 09

Ma y 09

Jun 09

29,1 29,2 31,5 31,6 33,1 34,6 34,2 35,2 36,4 39,1 37,5 36,2 36,9

33,3 35,2

AIR CONDITIONER COOLING WASHINGMACHINES

51,7 45,5

13,9 1,1

18,2 1,2

© by GfK-RT, www.gfkrt.com

MICROWAVE OVENS

48,3 48,5 53,4 50,8 47,6 45,2 42,3 44,4

48 44,9

43,6 44,6

43,9

19,3 19,4 19,1 20,9 20,7 19,2 17,6 16,8 16,4 17 18,9 14,1 15,1 1

1

1,1

1,3

1,3

1,3

1,7

1,6

1,3

1,2

1

0,9

1,1

PRJ 80109 / RG 1482919 / ID 54583534


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Home Appliance Growth vs last year Jan 09-Jun 09

Philippine 27 Sales Value <LC>

Total

-26,4

AIR CONDITIONER

-22

COOLING

-35,5

Sales Units

-20

-20,6

-29,7

WASHINGMACHINES

-3,4

-4,9

MICROWAVE OVENS

-21,1

-19,7

© by GfK-RT, www.gfkrt.com

Price <LC>

-8

-1,8

-8,2

1,6

-1,8

PRJ 80109 / RG 1482919 / ID 54583535


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Home Appliance Growth vs last year Jun 09

Philippine 28 Sales Value <LC>

Total

AIR CONDITIONER

COOLING

WASHINGMACHINES

MICROWAVE OVENS

© by GfK-RT, www.gfkrt.com

-31,6

-21,6

-43,8

-8,1

-26,1

Sales Units

-21,4

-16,7

-34,2

-7,2

-19,9

Price <LC>

-12,9

-5,9

-14,5

-1

-7,7

PRJ 80109 / RG 1482919 / ID 54583536


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Telecom Sales Value % Jan 08-Jun 08 - Jun 09 Ja n 08-Jun 08 Ja n 09-Jun 09

29

Jun 08

86 93,1

Philippine

MOBILE PHONES

Jul 08

Aug 08

Se p 08

Oct 08

No v 08

De c 08

Ja n 09

Fe b 09

Ma r 09

Apr 09

Ma y 09

Jun 09

87,2 86,6 87,4 85 84,4 85 86,2 87,9 89 89,2 89,9 91,5 92

SMARTPHONES HEADSETS

13,9 6,8 © by GfK-RT, www.gfkrt.com

8

8,5

13,3 12,5 14,9 15,5 14,9 13,8 12 10 10,7 10,9 12,7 PRJ 80109 / RG 1482919 / ID 54583537


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Telecom,Photo Growth vs last year Jan 09-Jun 09

Philippine 30 Sales Value <LC>

MOBILE PHONES

-11,3

8,4

SMARTPHONES

HEADSETS

DIGITAL CAMERAS

© by GfK-RT, www.gfkrt.com

Sales Units

94,4

-31,5

-18,2

84,5

15,2

2,2

Price <LC>

3,9

5,3

-40,5

-1,7

PRJ 80109 / RG 1482919 / ID 54583538


GfK andTechnology Technology GfK Retail Retail and

7/2009 7/2009

Telecom,Photo Growth vs last year Jun 09

Philippine 31 Sales Value <LC>

MOBILE PHONES

SMARTPHONES

HEADSETS

DIGITAL CAMERAS

© by GfK-RT, www.gfkrt.com

11,1

74,9

9,2

3,3

Sales Units

Price <LC>

25,9

-11,8

79,3

-2,5

51,7

-28

12,2

-7,9

PRJ 80109 / RG 1482919 / ID 54583539


GfK Retail and Technology

7/2009

Glossary Terms 32

Cons. Electronics

:

consumer electronics (CE), i.e. audio & visual products e.g. Colour TV, Camcorder, Audio Home System.

Home Appliance

:

major domestic appliance (MDA) and small domestic appliance (SDA). MDA includes Air Conditioner, Cooling (Refrigerator), Washing Machine, Microwave Oven. SDA includes Food Preparation, Shaver, Iron, Vacuum Cleaner.

Photo

:

digital camera.

Telecom

:

telecommunication, e.g. Mobile Phone, Headsets.

Independents

:

retail stores with less than 3 outlets.

Chains/MM

:

chain retail stores with 3 or more outlets and central policy. MM (MassMerch) comprises department stores and/or hypermarkets.

<LC>

:

Local currency.


GfK Retail and Technology

7/2009

Glossary Terms 33 GfK Retail and Technology

4/2009

Chart Analysis :

Total Sales Value % JAN08-MAR08 - MAR09 JAN0 8-MAR08

Philippine

JAN09-MAR09

MAR08

MAY08

JUN08

JUL08

33,5 31,7 31,8 31

34,4 32,2

18,5

APR08

AUG0 8

SEP08

OCT 08

NOV0 8

DE C08

JAN09

FEB0 9

- JAN08-MAR08 – MAR09 refers to January to March 2008 and January to March 2009

MAR09

- 1st bar shows Jan to Mar 2008; 2nd bar shows Jan to Mar 2009; all other bars show each period from Mar08 to Mar09

31 31,8 31,6 33,6 33,7 32,3 33,1 32,2 31,3

- Each bar adds to 100% and looks at the value share in local currency of the products within the specified period

19,5 17,4 17,9 16,9 17 17,1 18,1 19,2 23,9 25,5 26,6 24,1 22,2

17,4 CONS. ELECTRONICS MAJOR DOMESTIC APPL.

4,3

4,7

PHOTO

4,2

TELECOM

4

3,5

4,2 4,2

4

4,6 4,9 4,5 4,7 4,4 4,4 4,7

44,5 44,6 43,7 46,1 45 46,2 45,8 43 40,3 39,3 38,4 40,8 41,7

42,9 45,6

© by GfK-RT, www.gfkrt. com

Chart-ID: RG1393000-Panel Share MAT

GfK Retail and Technology

RG1393000-Panel Share MAT

4/2009

Total Growth vs last year January 2009 - March 2009

Philippine

Sales Value <LC>

Total

-18,1

Sales Units

-7,6

- shows the growth Jan to Mar 2009 against Jan to Mar 2008

-11,3

-23,3

-17,7

-6,7

MAJOR DOMESTIC APPL.

-22,8

-18

-5,8

© by GfK-RT, www.gfkrt. com

-9,5

TELECOM

-12,7

- looks at the growth by Sales Value in local currency in the 1st column, Sales Units in the 2nd column, Price in local currency in 3rd column

Price <LC>

CONS. ELECTRONICS

PHOTO

-8,8

-0,8

0,8

Chart Analysis :

-13,4

Chart-ID: RG1393000-Panel Growth YTD

RG1393000-Panel Growth YTD


GfK Retail and Technology

7/2009

Glossary Terms 34 GfK Retail and Technology

4/2009

Total Growth vs same period PY March 2009 Sales Value <LC>

Total

-13,8

Sales Units

-9,3

-19,4

-14,2

MAJOR DOMESTIC APPL.

-18,7

-15,2

PHOTO

-3,8

-6

-4

-8,1

-8,2

- looks at the growth Mar 2009 against Mar 2008

Price <LC>

-4,9

CONS. ELECTRONICS

TELECOM

Chart Analysis :

Philippine

4,7

3

© by GfK-RT, www.gfkrt.com

-10,9

Chart-ID: RG1393000-Panel Growth Mth

RG1393000-Panel Growth Mth

GfK Retail and Technology

4/2009

Total Sales Value % YTD 2009

Philippine

- YTD : year to date

Total

CONS. ELECTRONICS

MAJOR DOMESTIC APPL.

PHOTO

YTD 2008 YTD 2009

YTD 2008 YTD 2009

YTD 2008 YTD 2009

YTD 2008 YTD 2009

8,6 18,4 16,9

12,3

6,7

7,4

9,6

TELECOM

YTD 2008 YTD 2009

12 24,2 32,2

INDEPENDENTS CHAINS/MM

81,6 83,1

91,4 87,7

93,3 92,6

90,4

88 75,8 67,8

© by GfK-RT, www.gfkrt. com

Chart Analysis :

Chart-ID: RG1393000-Trade Share by Panel

RG1393000-Trade Share by Panel

- looks at the share by trade type Year to date 2008 and Year to data 2009


GfK Retail and Technology

7/2009

Terms of Usage and Disclaimer 35

GfK data is collected in accordance with generally accepted standards of the research industry. GfK draws an appropriate sample for representative extrapolation to the universe; the data in this report reflects panel market based on the GfK audited channel. GfK shall not be liable to the Client for lost profits or revenues, economic loss, including consequential or similar damages, arising out of either the use of GfK Data by the Client or GfK or the performance of any consulting, analytical or other services by GfK. The information in this report can be republished as long as GfK is quoted as the source.


GfK Market Insight (GMI) GfK. Growth from Knowledge Contact : GfK.InfoPH@gfk.com Mr Jake Savellano


GfK Philippines' Market Insight June 2009