Spending and inflation

  • The Italian economy entered recession for the third time since 2008 in Q3 2014. It is expected to recover in 2015.

  • Istat, the Italian national statistical office, expects a marginal increase in Italian household spending in 2014, after two consecutive years of falls.

  • Consumer spend on electrical goods has been in freefall in recession-hit Italy since 2012. For 2014, we expect the category to post a third consecutive year of negative growth, but the rate of contraction should be slower than in 2013, suggesting some signs of recovery.

  • Electrical goods share of total consumer spend has shrunk since the deep recession of 2012.

Figure 1: Italy: Spending on electrical goods as % all consumer spending, 2009-14
[graphic: image 1]
Source: Istat/Mintel
  • Depressed demand has led electricals retailers to reduce prices dramatically to lure back shoppers. The telephone and telefax equipment sector experienced the biggest drop in prices, with annual average inflation rate at -16.2% in 2014, compared to -7.0% in 2013.

Figure 2: Italy: Consumer price inflation on electrical products: Annual % change, 2010-Dec 2014
[graphic: image 2]
Source: Eurostat © European Union, 2013-14

Channels of distribution

  • Electrical specialists dominate the market. They have battled over price competitiveness in recent times

  • Competition from non-specialists is limited, however we expect online-only retailers to have grown their share of sales of electricals.

Sector size and forecast

  • After two consecutive years of contraction, we expect total retail sales in Italy to have returned to positive sales growth in 2014.

  • Using the broader household goods category as a barometer, we predict a slow improvement in electrical retail sales as the economy slowly recovers.

The retailers: financials and outlets

  • Buying group Expert Italy is the market leader. Its sales and store portfolio were boosted by the acquisition of UniEuro in 2013.

  • Metro Group-owned Media-Saturn, which trades as Media World in Italy, announced in 2014 that it will scrap the Saturn electronics superstore format in the country by the end of 2015.

  • Expert Italy and Media World together accounted for almost a third of sector sales in 2014.

  • The top three electricals specialists have increased their grip on the market, collectively growing market share from 31.2% in 2012 to 38.7% in 2014.

Online

  • 73% of Italian households have internet access, far lower than the EU (28 countries) average of 81%.

  • The percentage of Italian households buying computer hardware (2%) and electronic equipment (5%) online in 2014 lagged the EU (28 countries) average of 10% and 14%.

  • We estimate e-commerce accounted for 1.9% of all retail sales in 2014, with electricals bringing in a quarter of online sales.

The consumer – Where they shop

  • Media World leads the market, but the next two most popular retailers, Euronics and Amazon, are close behind in terms of shopper numbers.

  • Amazon is the only pureplay online retailer to have made any significant impact in the Italian electricals market. Elsewhere the evidence suggests Italian internet users prefer to buy in-store rather than from the store-based website.

Figure 3: Italy: Retailers used to buy electricals goods, in the last 12 months, January 2015
Base 2,000 internet users, aged 16+
[graphic: image 3]
Source: Lightspeed GMI/Mintel

The consumer – Attitudes to buying electricals

  • Italian internet users value lower prices and good after-sales service.

  • Yet they are sceptical about special offers and half think that all retailers charge the same price anyway.

  • Almost half would like to be able to buy on credit.

Figure 4: Italy: Attitudes to buying electrical goods, January 2015
Base: 1,790 internet users aged 16+ who have bought electricals in the last year
[graphic: image 4]
Source: Lightspeed GMI/Mintel

What we think

2014 was another tough year for the Italian electrical retail sector as the country slipped into its third recession since 2008. Consumer expenditure on electrical products fell for a third consecutive year as households reined in non-essential purchasing.

Depressed demand forced retailers to lower prices and offer steep discounts, resulting in deep deflation in the electricals category. With the economy forecast to pick up in 2015 we expect the electricals retail sector to recover marginally.

Electrical retail specialists dominate the sector, but looming large is online-only giant Amazon, which has quickly established itself in the market after launching a dedicated Italian portal in 2010, when the Italian online market was in its early stage of development.

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