EXECUTIVE SUMMARY
In-home consumer electronics suffers
Consumer electronics showed a decline in growth even though Colombia's economy was starting to make a healthy recovery which should be sustained for several years. While lower prices resulting from both government regulations and increasing competition drove growth in consumer electronics, the low average income of Colombian households limits the ability of companies to profit. In-home consumer electronics suffered a huge decline in 2010 as consumers prioritised portable electronic items, but this category may experience renewed growth as the Impuesto al Valor Agregado (IVA) (value added tax) was eliminated in border towns.
Innovation, portability and multi-functionality drive consumer electronics in 2010
Electronics that can offer many functions -telephony, internet, photography, video recording, games, and working applications - in only one device captivated Colombian consumers in 2010. Smartphones, tablets, portable multimedia players, witnessed the greatest success since Colombians increasingly need technology that makes their lives easier. In the same way, sophistication of image (HD, 3D) was a key innovation to drive consumer electronics in 2010.
Digital television broadcasting will completely replace analogue
The modernisation of Colombian television, moving from analogue to digital broadcasting is expected to take place in the country, reaching 99% of consumers by 2019. Digital broadcasting is expected to provide consumers with higher definition and quality image, completely displacing analogue televisions.
Electronics as status symbols
Colombians will continue to seek the latest technology as acquiring a new product is the equivalent of acquiring society status. New advances in portable electronics have shown a great acceptance, such as new technological advances in mobile phones, and portable devices which allow consumers to show off their latest purchase.
Internet retailing grows
Colombia continues to see an uptake in the number of internet users and consumers have become more confident in purchasing goods via the internet, making this channel more important within consumer electronics. While store locations where consumers can test their electronic items are still preferred, consulting internet prices before shopping has started to become a common practice due to sites such as mercadolibre.com.
In-home consumer electronics on a decline as portability becomes important
Consumer electronics witnessed positive growth overall during the review period. In-home consumer electronics, however, continuously suffered from a decrease in volume and value sales, which impacted consumer electronics overall to display low growth in 2010, mostly due to low incomes and spending as the country faced the aftershocks of the recession.
The unemployment rate, however, once again began to lower in 2010 allowing for consumers to have additional disposable income to spend on electronics. Real GDP growth also experienced a return in 2010 and inflation declined from 4% in 2009 to 2% in 2010.
Current Impact
In-home consumer electronics declined by 22% in 2010, driving consumer electronics as a whole down. However, portable consumer electronics witnessed 5% current value growth in 2010. With reduced purchasing power, consumers decided to buy portable items which tend to be more affordable and can be used in all locations as well as being status-symbol items.
Consumers view their electronic purchases as a symbol of status, which creates an audience which is constantly looking for the latest innovations. Portable consumer electronics represents 61% volume share of total consumer electronics and registered the highest volume growth in 2010, partly due to the fact that consumers are able to show-off their portable devices. Tablets such as the iPad were key products in 2010, incorporating a multiplicity of functions in one portable device, which has become an important requirement for Colombians’ purchasing decisions.
Outlook
The enthusiasm for buying is expected to be renewed during the forecast period as it was delayed due to the global economic crisis which placed a temporary halt on purchasing non-essential items.
The expansion of Colombian internet usage and coverage, as well as increased computer literacy will result in a rise in e-commerce, and thus growth in the use of financial services such as credit and debit cards. M-commerce, although in its early stages, also has great potential for growth, especially as mobile phone penetration is high and expected to grow.
Future Impact
As consumers begin to buy electronics again, the environment will begin to move more rapidly, with a predicted constant value CAGR of 7% for the forecast period. Competition is expected to increase and main companies are expected to expand their product portfolios.
Colombians are willing to buy electronics as long as companies offer significant advantages in technology, portability and comfort. Therefore, key players are called upon to play an important role over the forecast period. This is expected to benefit not only producers but also consumers, because a significant number of Colombians increasingly need electronics that enable them to perform different functions in reduced amounts of time.
New technologies are welcome in Colombian consumer electronics
New technologies in consumer electronics were introduced into Colombia in 2010. 3D technology for digital TVs, cameras and camcorders, although not yet generating a high demand due to its recent entry and high prices, created great interest in Colombian consumers as they increasingly demand high standards of quality television.
Current Impact
The greatest impact in terms of sales might have been smartphones, which displayed a 50% current value CAGR during the review period. Since Colombian consumers are increasingly looking for more portable and multifunctional electronic devices, smartphones were an appropriate response to this demand in 2010. The third generation connectivity (3.5G) motivated consumers even more to purchase this product since they can use messaging functions and navigate through the internet almost anywhere and faster than before.
Increased demand for sophistication encouraged key players to introduce innovations into their product portfolios. Products that were left behind in terms of innovation are slowly losing their presence and are expected to remain so, which is the situation with portable mp3 players, hi-fi systems, analogue cameras and analogue TVs, among others. Colombian consumers are starting to prefer smaller products that offer telephone, internet, recording and photography functions, games, and working applications. Consequently, this shift has been beneficial for the growth in consumer electronics, but is leaving behind some products that only a few years ago were in high demand.
Both consumers and manufacturers of segments such as tablets, portable multimedia players, and digital TVs, as well as smartphones, benefitted from these trends. Retailers that sell these products also benefited.
Outlook
The trend is expected to continue in the coming years, depending on the economic stability of Colombia, as well as in prices. It is expected that the internet will continue to penetrate a greater number of consumers in Colombia along with an increase in speed, which should raise demand for portable electronics such as smartphones, portable multimedia players, laptops, netbooks, and tablets, among others. Digital TVs should also influence a higher demand for cutting-edge digital televisions in order to take advantage of the new signal. Therefore, there are many incentives expected for this segment to continue growing including the latest technologies, and consumers should respond positively to these changes. This, of course, may have its counterpart in some products that should quickly become obsolete, or that will barely maintain its presence lowering its prices.
Future Impact
One of the main obstacles to this dynamics of innovation and consumers’ response to grow over the forecast period will be if the purchasing power of Colombians is substantially reduced, since a large proportion of them are price-sensitive, especially middle-income segments which were lately involving into consumer electronics consumption driven by a better economic situation and credit cards. If the disposable money of these segments is diminished or access to credit restricted, these consumers may be forced to postpone some purchases of electronics or, at best, purchase products guided by price at the expense of quality and sophistication.
If the economic background allows consumers to pay for better technology, the industry is expected to respond by increasing and sophisticating the supply of consumer electronics. This may intensify competition in order to attract consumers, allowing consumers to pay for technology without having to incur extremely high expenses. As a result, both consumers and producers could benefit.
Digital television
Digital television offers improved image and audio. The technology optimises the radio electric spectrum so with the space that was needed to produce one channel, several are produced.
The European model was selected for digital television in Colombia by Comisión Nacional de Televisión (CNTV) and by the end of 2010; digital TV became available in Bogota and Medellin. The European Union might contribute to the switch as Televisión Digital Terrestre (TDT) was selected by Comisión Nacional de Televisión (CNTV).
The plan for digitalising television has two stages. Between 2011 and 2012, 38 of the main stations of public television will be digitalised. The second stage is set to begin in 2012 and includes the remaining 25 stations.
Current Impact
During the review period, a volume drop of 13% was seen in analogue TVs and in 2010 alone, volume declined by 7%. By way of comparison, digital TVs’ volume growth in 2010 was 24%. In terms of value, analogue TVs’ sales declined by 61% in 2010.
In 2010, digital television broadcasting is offered by a small number of television channels, which a limited part of the population can afford to have. Caracol and RCN were the first channels to have digital television at the end of 2010. As of 2010, Señal Colombia and Canal Institucional have a test signal in Bogotá.
Consumers were prompted to purchase televisions in 2010 that allowed digital signal as moving from analogue to digital broadcasting is expected to take place in the country, reaching 99% of consumers by 2019. The trend toward digital broadcasting has had a negative impact over analogue TVs’ players, which have survived mainly due to a group of the low and middle-income segments that continue to purchase this format because it is cheaper than an LCD TV or Plasma TV, but this price gap is narrowing because of the intense competition that took place within digital TVs toward the end of the review period.
Outlook
The digitalisation of television is expected to make analogue TVs obsolete. Analogue TVs during the forecast period is expected to see a volume CAGR of -12% and constant value CAGR of -13%. Digital TVs is expected to witness a constant value CAGR of 9% during the forecast period as consumers will demand the new technology.
Future Impact
If the purchasing power of Colombians decreases over the forecast period it could slow the process of uptake in digitalisation, but is not expected to stop the trend toward digital television broadcasting. Moreover, manufacturers are expected to continue supplying increasingly more sophisticated digital TVs.
Manufacturers should widen their supply of digital TVs, as they make this segment more sophisticated. The new digital broadcasting is expected to continue increasing demand for digital TVs, so key players might want to avoid commoditisation of this electronic device in the mid-term by greater innovation. More HD and 3D contents are expected to be available in the next years, so the competition is expected to be intense among the main players (Sony, Panasonic, and LG Electronics).
Digitalisation of Colombian television may benefit all parties. Consumers will see improvements in image quality, sound, and maybe better contents. This might be as long as it does not imply paying high prices for digital contents.
Mobile phones helps to drive consumer electronics
Mobile telecommunications in Colombia was one of the world’s most dynamic categories during the review period. Lower prices resulting from both government regulations and increasing competition were the drivers behind this growth. Mobile household penetration increased astonishingly from 19% of households in 2003 to 77% of households in 2010.
Current Impact
Mobile phones grew by 5% in current value sales in 2010, with smartphones showing the highest growth in 2010, increasing retail value sales by 5%. Smartphones is projected to witness a 15% constant value CAGR over the forecast period, which can be attributed to the higher unit prices for a smartphone when compared to a feature phone. The entrance of more brands in Smartphones should help decrease unit prices in the forecast in constant terms.
One out of three consumers gains internet access through their mobile phone in Colombia. The Colombian consumer wants to feel connected anywhere and everywhere. Manufacturers are preparing to offer fixed internet and mobile internet as a combined offer.
Probably the most influential technology in 2010 was the smartphone, which presented significant advances in terms of portability, operating systems, ease of use and connectivity. The growth of 3.5G in Colombia made smartphones one of the leading products in 2010. The emergence of the Android operating system also brought advances for the development of this segment in Colombia.
Outlook
In 2010, 200 municipios (municipalities) in Colombia were connected by optical fibre. The government is working on a plan to allow all 500 municipios (municipios) to be connected.
Colombians are expected to continue demanding more advanced mobile phones because of the status properties they provide and their functionality. It is expected that the internet will continue to penetrate a greater number of consumers in Colombia along with an increase in speed, which should raise demand for portable electronics such as smartphones, portable multimedia players, laptops, netbooks, and tablets, among others.
Future Impact
Mobile phones is expected to record a constant value CAGR of 10% over the forecast period. Competition for smartphones began toward the end of the review period, with many advances expected in the coming years. It is expected that mobile networks’ availability will increase in the short-term, which should also help the demand for mobile phones to grow, especially for smartphones since this format has several added functions that feature phones do not possess.
Mobile phone players might be forced to launch new products that meet consumers’ needs over the forecast period, because Colombian consumers are interested in sophistication and portability. New operating systems are going to enter such as Windows Phone 7, which should intensify competition for technology and also for prices. Wider wireless connections availability is also expected, which should encourage consumers to look for the best products in terms of connectivity and internet speed.
Hypermarkets is the most important distribution channel
Hypermarket outlets in Colombia are known to have a wide product portfolio at reasonably low prices, in relation to a wider penetration through middle-income segments’ neighbourhoods. While electronics and specialist retailers follows closely as the second preferred channel, hypermarkets is still the number one choice of consumers.
Current Impact
Hypermarkets is even more of an important channel than specialist retailers in consumer electronics in Colombia. Hypermarkets accounted for 48% volume share in 2010 while electronics and appliance specialist retailers accounted for 40%.
While the internet still remains negligible, the number of internet subscribers in 2010 reached 2.6 million and consumers are becoming more confident in making internet purchases; consumer electronics players are rapidly introducing internet retailing, improving payment options and security. Purchasing electronics via the internet is usually cheaper for consumers, which is important for middle-income segments which are more price-sensitive than high-income segments.
Outlook
Hypermarkets is expected to continue leading distribution of consumer electronics, because of the great availability of products and outstanding presence in Colombian cities. However, internet retailing is expected to become more prominent in the future; thus fewer consumers are expected to visit hypermarkets from which to purchase consumer electronics.
Future Impact
Although distribution channels such as hypermarkets and internet retailing are expected to grow over the forecast period, the competition is expected to remain stable, since there are basically the same players that are competing, with no new players expected to alter share. Since both hypermarkets and internet retailing represent a more convenient offer for consumers, prices may be hardly affected by changes in distribution channels, or maybe record marginal decreases over the forecast period. Consumers might benefit the most in the short-term, because internet retailing offers more comfort and lower prices to consumers.
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Overview
Discover the latest market trends and uncover sources of future market growth for the Consumer Electronics industry in Colombia with research from Euromonitor's team of in-country analysts.
Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.
If you're in the Consumer Electronics industry in Colombia, our research will save you time and money while empowering you to make informed, profitable decisions.
When you purchase this report, you also get the data and the content from these category reports in Colombia for free:
The Consumer Electronics in Colombia market research report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic volumes and values, company and brand market shares
- Five year forecasts of market trends and market growth
- Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
- What is the market size of Consumer Electronics in Colombia?
- What is the fastest growing product category?
- What consumer electronics segments are growing the fastest?
- What are the major technology trends in new consumer electronics products?
- How has the economic downturn shaped consumer purchasing behavior when it comes to consumer electronics?
- How has the economic downturn shaped consumer purchasing behavior when it comes to consumer electronics?
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This industry report originates from Passport, our Consumer Electronics market research database.
