ChannelLife NZ - Add on and accessorise

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Add on and accessorise

Run a Google search on accessories and the first result on the list has nothing to do with sparkly jewellery – it’s the Apple iPad. That’s how exciting and popular the world of IT accessories has become. In fact, according to Sandra Hanchard, Analyst for internet research firm Experian Hitwise, visits to websites under the accessories and consumables group by New Zealand internet users increased by 16.7% in April 2010 when compared to April 2009. The top 20 internet search terms in the same category are listed opposite and include keyboards, ink, headphones and paper. And there’s a fairly even split between men and women running the searches, with 28.8% of them being in the 25-34 years age bracket. Accessories and consumables, then, are rising in popularity and are a great way of adding extra margin to a sale.
Tailor made
Last time The Channel covered this topic, we discovered that accessories in particular, are all about individualising our IT gadgets, even within the workplace. It was all about identifying which ‘tribe’ you came from and what sort of person you are. Added to this, Hanchard says: “There is a significant opportunity for accessories and consumables retailers to generate more traffic online through social media. The retail sector overall received 150% more traffic from websites in social networking and forums than accessories and consumables retailers. Retailers can use social media to generate positive word of mouth and allow fans of products to act as advocates for their brands.” This plays directly into the idea of identifying oneself through accessories brand affiliation.
Keeping the memory alive
On the shop floor there have also been some strong trends of note. One of these segments is that of memory devices, which continues to be volatile in terms of pricing. Cameron Breingan, Product Manager for JB Hi-Fi, explains that there’s rapid price erosion, particularly in the smaller-capacity ‘commoditised’ products like USB flash drives, and more interest in higher capacity cards such as 4GB and 8GB. “16GB pricing is becoming more attainable, but 32GB is still expensive,” he says.
Added to this, there are some retail-friendly solid state drive products in smaller capacities (up to 128GB) available. “Whilst there is still a hefty premium over spinning disc, the gap has closed considerably. There are performance and energy benefits to SSD which may see interest from enterprise environments as an interim ‘upgrade’ path for a workforce PC or notebook fleet,” Breingan suggests.
He has also witnessed a “huge and consistent growth” in external hard drive categories. While there is evident price erosion in the smaller capacity products, he says “we can expect to see some value creeping back into the category with the introduction of USB 3.0 and greater prevalence of eSATA.” The first devices with USB 3.0 were released in January this year and have the new SuperSpeed bus feature that provides a fourth transfer mode at 5.0 Gbit/s. Every new upgrade or launch is a new opportunity for resellers and retailers and, since the market is focused on efficiency, it’s reasonable to think there will be demand for products that play into that area.
Another newish technology that is really taking hold is SD cards, which are dominant in the format stakes. “Sony’s recent move to include SD capabilities on their digital imaging hardware is a sign of the dominance in this media type,” says Breingan.
Rats and mice
Other areas of the accessories market are also showing significant promise, with a clear preference for Bluetooth mice and keyboards (as opposed to straightforward radio frequency) showing through. In the headphones category, noise-cancelling technology is showing good growth in popularity. “I think people are investing more in their personal environments and seeing the sense in maximising the potential in the portable media devices by upgrading to a decent set of headphones. There are a surprising number of people buying in the $200-plus segment,” explains Breingan. Similarly, there are good levels of interest in higher-resolution webcams, as the difference between a VGA camera and a 2mp or 5mp webcam is “phenomenal”. These trends show that, despite the recession, value is an important consideration for any customer, any time, so you should make sure you carry a good mix of high-value and high-featured products to cater for all ends of the market.
Inking the deal
The consumables market is another good margin earner, generally speaking. IDC research firm estimates that print consumables, which covers inkjet cartridges and laser toners (remanufactured, refills, CISS and DYI refills included), is a $US1 billion industry.
Senior Market Analyst for IDC, Jalan Jendral Sudirman, says the global economic crisis slowed the growth of the consumables market, pushing up manufacturing costs while consumer spending declined and corporate budgets decreased. However, Sudirman suggests “the market should be able to catch up in 2010 as the economy strengthens, causing corporate and many other sectors such as SMB to increase, which will generally boost the market.” In the consumables market there is always competition between ‘original’ vendors, who provide branded consumables for their own hardware, and the ‘compatible’ vendors, who provide generic consumables that are non-vendor specific. During the recession, compatible vendors had the advantage because they were able to leverage their generally lower-priced offerings. That being said, Sudirman comments that original consumable vendors’ main profit comes from the sales of their consumables, not their hardware. “The economic crisis brought some manufacturers to focus on low-end products and find ways to lower costs, but at the same time maintain margins. Product-wise vendors tended to temporarily reallocate resources and push more hardware into the market to maintain that margin.”
Added to this, managed print services (MPS), which cut costs and minimise the manpower required for operations, will also, according to IDC, “harm the compatibles” as MPS are a contract-based product which include the purchase of original consumables. Sudirman concludes: “In conjunction with a promising economic environment and stable political infrastructure, we can safely assume 2010 will be a prominent year for IT industries, which includes print consumables.”
Your opportunity
As individuality and digital media take hold, the accessories and consumables markets become an increasingly good opportunity to add margin to straightforward hardware sales, so don’t forget to include them in every quote you present to your clients. 

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