The European electricals market was worth an estimated €147.4 billion excluding sales tax in 2005 giving average spending per capita of €324. The market has seen low levels of growth in recent years. While demand has been fairly strong it has been held back by intense price deflation. The UK is the largest electricals market in Europe, worth €36.4 billion (excluding VAT) in 2005, with per capita spending of €609. The UK housing boom has contributed to growth in spending on household electricals, while the British consumer’s appetite for new technology has fuelled spending on brown and grey goods.

The brown (audio-visual) and grey goods (PCs and multimedia) sectors are primarily driven by new technology and product innovation. An absence of new product development can create a “product gap” and hit consumer spending on that category. Conversely the successful launch of a new product such as the Apple iPod can help stimulate the market, not only in terms of sales of the product itself but also in other areas as well. The malaise in the white goods sector continues and has prompted a change in product mix in favour of brown goods. These products are subject to greater price deflation and therefore have had a negative impact on retailers’ margins.

Mintel forecasts that the electricals specialists’ sales will grow by 6.4% between 2005 and 2010 underperforming European retail as a whole. The strongest growth will be experienced in Portugal, Sweden and Ireland.