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Hot Xmas predictions: forecasting the nation’s wish-list

01 Nov 08

“Christmas is great but everyone’s insane!”, said an anonymous poet... and don’t we know it! As Christmas fever began to permeate stores back in September, retailers need to be planning for the coming Christmas rush. For the IT and consumer electronics categories in particular, gift options become more and more elaborate, and success can hang on predicting the year’s hottest products. The Channel talked to some key retail and IT industry players to give you the inside track on Christmas product trends and sales techniques.
What’s hot
Hitwise, a company that tracks internet searches across about a dozen verticals and several countries, is well placed to predict popular Christmas purchasing choices. Its NZ Senior Research Analyst, Sandra Hanchard, took a look at what is popping up on the Christmas radar so far. “It’s the obvious one but it’s the one the data supports: the 3G iPhone,” she stated.
Ingram Micro’s General Manager for the Consumer, Components and Consumables Group, Desmond Ling, agreed, saying the iPhone is a firm favourite as “it looks hot and has breakthrough technology that is actually useful – a winning combination”. There has also been interest in iPod’s nano-chromatics, and Hitwises’s Hanchard observed “anything that Apple releases just has a really strong consumer following and we always see that reflected in the search behaviour”.
In fact, she predicted the whole suite of
Apple MP3 players and accessories will do well this year, due to their strong consumer appeal and online forums which “help to build the consumer fan groups”.  Sally Cousins, PR and Communications Manager for The Warehouse, agreed, picking iPod as a winner thanks to the nano-chromatics range, which has a wider range of colours and increased memory. She noted that MP3 players in general have “increased in popularity, with people using them as accessories and owning multiple devices”.
In terms of popular electronics categories, Hitwise research showed that game consoles (Nintendo Wii, Xbox 360 and PSPs), digital cameras and Blu-ray players are currently the most frequently searched for items. Searches on TomToms, which were very popular last year, also seem to be picking up again; and Ingram Micro’s Ling suggested that navigational units in general will be popular because “the New Zealand public is starting to be more aware of their functionality and benefits”.
Another repeat category, according to The Warehouse’s Cousins is mobile phones, which were popular stocking contents last year.  They are becoming increasingly feature rich, comprising everything from built-in music players and FM radio to more powerful cameras, GPS capability and expandable memory. Connectivity is definitely the order of the day and, thanks to the prevalence of broadband, Ingram Micro’s Ling predicted that wireless will be a big hit, as well as storage to increase capacity, backup and store digital photos and data.
Of course each of the consumer electronics categories is likely to have its own particular trends so The Channel took a closer look at the following groups of products to help you predict the winning stock combinations this year:
MP3s & GPSs
Although popular last year, constant innovation and additional features will likely cause MP3 players and navigational units to be just as popular this year.  Indeed both products were highlighted by our vendor neutral spokespeople as being sure candidates to appear beneath many a tree this Christmas.  With GPS vendors such as TomTom and Navman releasing models this year with richer, more thorough mapping capabilities, upgrades are of high probability for users who already have purchased a first GPS unit. According to Hitwise research and general opinion, iPod and TomTom would seem to be the stand out winners in this category.
Digital cameras and video
As highlighted by Hanchard of Hitwise, digital cameras are likely to be best sellers again this year, with digital SLRs becoming more popular, with functions like ‘live view’ and ‘creative auto’ bridging the gap between digital compact and digital SLRs. SanDisk’s Country Manager Josh Velling has also noticed a trend toward SLR cameras and an increase in megapixel capacity.
According to Rochelle Mora, Product Manager – Photographic, Canon New Zealand, other developments include “high definition video, enhanced face detect, flash memory video”, plus compact photo printers for “photos on the go”. Mora commented that “video cameras are experiencing rejuvenation as new models, formats and technologies come into the range, offering higher quality recording and ease of use allowing you to be free to record”. SanDisk’s Velling also mentioned many camcorders now have memory slots instead of video slots, aiding the resurrection of the video camera market noted by Mora.
As digital cameras evolve and converge with the video camera, memory card speed and capacity have become increasingly important – indeed these days Velling recommends a 4MB memory card and a 15MB transfer speed as the minimum specifications for consumer satisfaction. “The memory card capacity should be higher specced than the camera speed capacity”, stated Velling, who was emphatic that retailers not sell a good camera with the cheapest memory card, but tailor the memory capacity to each customer’s requirements.
Lexar Media’s Marketing Manager ANZ and South Asia, Matthew Luu, reiterated this: “Retailers and resellers should encourage consumers to purchase the highest capacity memory products they can afford.”
Mobile phones
As highlighted by Cousins from The Warehouse, mobile phones are also likely to do well this Christmas thanks to their feature rich formats. Fraser Scott, Director of the Business Management Entertainment and Devices Division for Microsoft, suggests they will be particularly popular among teenagers.
Allison Caruk, Marketing Manager APAC for i-mate, said she has noticed a growing trend toward touch screen mobiles, which are “gaining popularity due to their ease of use”. Renaissance’s Arunima Dhingra, Marketing Communications, highlighted the popularity of smartphones as the demand for owning an affordable feature rich mobile phone with information access capability “anytime and anywhere” is growing. She echoed Caruk’s comment, noting that the size of the screen and a highly user friendly interface are also driving the smartphone demand.
In the same vein, Caruk mentioned easy-to-use QWERTY keyboards as being increasingly desired by all customers. SanDisk’s Velling remarked upon a key trend towards ‘waking up’ mobile phones with extra memory. Up to 16GB of memory (roughly the size of your smallest fingernail) can be inserted into the appropriate slot of many modern mobile phone handsets to enable the full functionality. As Velling pointed out, nowadays  “people look at their phone in a different way, they look at it as a way to capture life’s moments” and the functionality on a ‘woken up’ mobile phone with a high megapixel camera is pretty phenomenal.
Notebooks & netbooks
Two major trends are portability and incorporating some sort of connectivity, according to Ingram Micro’s Ling, who gave netbooks like the Asus Eee PC from last year as an example. This year netbooks have become quite the hot item and Louise Reid, Market Development Manager - Consumer PCs for HP New Zealand, echoed Ling’s opinion, adding “netbooks are becoming increasingly popular and are fast becoming a must have item. Hot price point competition is also making them more affordable”. Renaissance’s Dhingra explained the netbook’s popularity as being due to “the growing demand for smaller, portable, light weight notebooks at a very attractive price point”.
In terms of trends within the wider notebook arena, aside from portability, the main requirements are “exceptional performance, great battery life, expanded wireless connectivity and extraordinary ease of use”, according to Rob Wilkinson, Consumer Business Manager ANZ for Toshiba. Logitech New Zealand’s General Manager Bryan Simpson had also noticed the increasing penetration of notebooks, which in turn has increased interest in peripherals for notebook computers.
Home entertainment
Logitech’s Simpson mentioned “the emergence of the digital home” in terms of the enjoyment of digital media, in particular digital music, within the home. The true digital home hinges on all electronic gadgets being able to ‘talk’ to one another. While we are still a little way away from that eventuation, touch screen computer hubs are now on the market to enable customers to sync all their entertainment needs and control them from a central hub.
Reid of HP affirmed this style of product is “perfect for those who want to simplify and organise their lives while enjoying their digital media and entertaining others”. In a similar vein, but at a lower price point, Reid also suggested digital photo frames will also remain popular this year. Similarly, LCD or flat screen TV sales have increased considerably over the last year, according to The Warehouse’s Cousins.  Microsoft’s Scott echoed this stating that now “they have become an affordable luxury”.
Ling from Ingram Micro pointed out that the increasing prevalence of broadband is creating demand for storage. With digital data making up such an important part of our work and home lives these days, both business and consumer customers require extra storage. Toshiba’s Wilkinson and Adam Gordon of the New Zealand Retailers Association have both noticed a trend toward portable storage devices that can be used to back up and transport data. SanDisk’s Velling has also seen a change in the way we use USB memory, especially now that it is available in orders up to 32 Gigabytes. This “allows you to transfer video content around the home as well”, he explained, since many modern DVD players have a USB slot. Velling foresees this trend continuing to grow in the future, and also noted that people are using USB drives as a form of backup and to transport large files.
Gaming is set to be a big category again this year, as highlighted by Hitwise’s Hanchard and Ingram Micro’s Ling, who said that the category “continues to evolve and excite”. Hitwise research shows that video and game retail sites get a particularly high number of visits in New Zealand.  Microsoft’s Scott expects gaming to be very strong this year: “The product is just so accessible in terms of range, games to support everyone in the family and the price point just demonstrates fantastic value – I think it will be a big Christmas for gaming.”
Julie Gray, editor of our sister publication NetGuide’s Game Console section, has drawn up her top list of games to look out for this Christmas. They include, in no particular order: Gears of War 2, Saints Row 2, Fallout 3, Guitar Hero World Tour, Rockband, Little Big Planet, Fable 2, Spore, and Far Cry 2. She also remarked “the PSP 3000 is worth checking out as far as consoles go and the Xbox 360 Elite, which comes with a 120GB hard drive should also be worth a mention”.
All these exciting products have their merits but, unfortunately, they don’t sell themselves, especially given the recent financial downturn.  Interestingly, the vendors and distributors interviewed by The Channel thought that value for money, not price, would be the deciding factor for many. This is borne out by Hitwise’s research: “More than ever consumers want to get value for their discretionary spend, so there has been a big increase for comparison type searches, and searches related to deals and cheap products. Interestingly I don’t think consumers are expecting freebies, because we’ve seen a decline in searches for the term ‘free’ and related topics.”
Likewise, Hanchard commented on the rise in comparison shopping sites and a global increase in searches for vouchers: “There is an interesting site called Vouchermate in New Zealand and that’s actually picking up quite strongly at the moment.”
Microsoft’s Scott turned the financial doom and gloom on its head, explaining, “There is more talk around the idea of ‘staycation’ (stay + vacation): an interesting trend where people invest in home entertainment and consumer electronic goods that make home life more comfortable and spend more time at home”. Time will tell if we see this trend sustained locally, but it’s something that makes sense and the channel would do well to follow it closely.
Top price products
Given the more sober financial climate, customers will, more than ever, want to make  informed choices and get longevity, endurance and quality for the lowest price, thus enticing people to buy those big ticket items could be tricky. The vendors and distributors interviewed by The Channel suggested that retailers bundle products which include accessories with the main product, or use added value propositions to make the sale. They also suggested that staff be well educated and excited about the products, able to understand and explain the difference between similar products and why one may have added value over the other. In-store demonstrations are a great way to get the staff fired up about a product.
In-store sales
Carefully thought out product placement is one way to catch buyers’ eyes, especially at Christmas when so many products are vying for attention. Anything that helps one product stand out over another will make a difference. Of course, front of store and window displays are most likely to win out, as are end cap placements. Nonetheless, simplicity is also key and HP’s Reid advised that “point of sale and merchandise needs to be eye catching, have an urgent call to action and assist with the close of a sale. It becomes very competitive in the retail space and hero products displayed with significant savings are always a winner”.
Online sales
The online shopping environment is different once again. Scott of Microsoft said, “I believe people purchasing online are looking for different services: knowledge/research, availability, price and speed of delivery”. Websites need to be clear, concise and easy to navigate with a straight forward path to the point of sale. Virtual tours or comprehensive photo galleries help customers to experience the product, and exclusive online offers and newsletters drive traffic to the website. Links to independent reviews and lists of optional accessories can help close the deal. Shoppers must feel confident handing over personal information, such as credit card details, so security should play a major part in any online strategy. Once a sale is made, the product must be shipped as fast as possible.
Kiwi shoppers
As one might imagine, the advent of the internet means that Kiwis tend to be in sync with the rest of the world in terms of product choices; however, Hanchard of Hitwise noticed a few differences in terms of shopping habits compared to other Anglophone countries. “Kiwis are a bit more likely to be last minute shoppers,” she commented. In Australia online searches typically pickup in the first to second week of September and peak around the second week of December, but Kiwi searches don’t peak until two weeks later. The strength of online auctions in New Zealand also sets it apart from the pack since TradeMe and the like have a “huge slice of the online retail space”, far more so than in other countries.
Personalisation and mobility
This Christmas season it would seem that value for money, portability, connectivity and personalisation will be the things that set successful products apart. Microsoft’s Scott explained: “I see more of a trend in the way we like to use and consume technology and that’s a drive to increased mobility and personalisation. People use their laptops in every room in the house now, and take them outside, to the holiday home, etc. Also, the desire to stand apart from the crowd is very strong, so the products and the peripherals surrounding them are paramount in that they must support that trend.”

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