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COEX 2007 Orlando, FL
Chief Industry Analyst, Marshal Cohen, and President, Foodservice, Dave Jenkins, speaking
Event Web site March 6-7, 2007
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Insights Mission
HomeIndustry Experts' Look Back/Look Forward
Our Industry Experts are always on the watch for emerging trends and stories in their respective industries. Recently, we asked them to highlight the bright spots and interesting plotlines of 2006, and to give us a sense of what they’ve got their eyes on for the year ahead. Here’s what a sampling of them had to say.
Automotive
“American motorists, fatigued by higher gasoline prices, cut back on the number of miles they drove in 2006. Since 80 percent of consumers use mileage to determine how often to service their vehicles, this translated into fewer service intervals. That helps explain why auto parts retailers sold more than 13 million fewer quarts of motor oil last year. However, consumers have a short memory. Falling gas prices last fall corresponded with an uptick in miles driven that could spark demand for automotive products and services. In fact, application parts sold through auto parts stores experienced a modest increase in units sold. Consumers may finally be attending to some much-needed repair and maintenance. I’m also keeping an eye on automotive appearance, which could be a bright spot for 2007 – many consumers say they expect to spend more in this area than they did last year. Good spring weather would provide a nice compliment to such sentiment, enabling consumers to get out and spend time on their cars.
- David Portalatin,
Director of Industry Analysis, Automotive
Consumer Technology
“In 2006, the consumer technology industry’s key trend was concentration – product segments that had been performing well continued to do so, and some extended their strong performance to become even more important. It was very much a ‘have and have not’ atmosphere, and while that started with products and product segments, it shifted to brands and distribution channels, as well. Products like notebook PCs, flat panel TV, HDTV, and digital audio players grew much faster than the market. Another hotspot in 2006 was the personalization of technology devices and content. Not too long ago, we talked about household penetration of tech products – now, it’s about consumers in the household each having their own devices, rather than sharing communal devices. In many homes, each consumer has a PC, a flat panel TV, an iPod, a cell phone, and a digital camera. This growth in personal usage has dramatically expanded the available market. For 2007, the theme will be ‘what makes your hardware go’ – and that is content. Home HD movies, digital still pictures throughout the home, placeshifting devices that let consumers watch content remotely, new HD channels from TV providers and video from the broadcasters, movie companies, and Web sites will all be huge factors in driving consumers to seek out new hardware to enable them access all this exciting content.”
- Stephen Baker,
Vice President of Industry Analysis, Consumer Technology
Entertainment
“Last year’s key trends were the continuing decline of CD sales, more growth in legal digital options, and tremendous growth in consumers’ acquisition of unpaid content from file sharing and burning or ripping CDs. In a sad continuation of a pattern, venerable retailer Tower closed shop as more CD sales moved to online and big-box retailers. And so far, no one has challenged Apple’s dominance of the legal digital domain. 2007 feels like more of the same – CDs struggling to remain relevant, iTunes dominating a growing legal digital landscape, and consumers taking content from friends and file-sharing services. The wild cards: will the industry drop Digital Rights Management, making it easier for consumers to use files across devices? Will this spur consumers to become more digitally oriented? Will this help Apple’s competitors in the device and e-tail markets? And what’s the implication for iPhone-like devices- will they make wireless a competitor to PC-based music services? The music industry will give us plenty to watch in the year ahead.”
“Last year was the second year of DVD sales maturity. Sales were up about five percent, though certain genres, such as TV, did better than average. This was truly a transition year, in an incubator sense. Next Generation DVD, HD, and BluRay launched, although at a somewhat slower pace than the industry had hoped. 2007 will be a better barometer of the consumer uptake of next gen and of the eventual winner in the format wars. 2006 also saw the introduction of movies in the iTunes service, complementing the TV shows that became available a year earlier. And though digital consumption barely registers compared to DVD sales or rentals, 2006 will be remembered as the year the legal revolution really began. Like music, the home video market will be challenged to transition to a digital age, ideally with less dissonance; the charge will be balancing the potential of broader distribution models and new sampling or promotion avenues without undermining the strong financial base that was built on the DVD. And then throw in the bogeyman that digital piracy is growing rapidly in the video space.”
- Russ Crupnick,
Vice President and Senior Industry Analyst, Music, Film & Video
Fashion
“In Canadian fashion last year, we spent lots of time examining and discussing girls’ and women’s apparel – sales of “apparel + basics” reached $12 billion. To put it into perspective, that’s up more than 10 percent over sales in 2001. The Child (ages 0 to 8) and Front-End Boomers (ages 50 to 59) segments grew 15 percent and 40 percent versus 2001, respectively. Women in the Front-End Boomers group spent $2 billion on apparel last year; the next-oldest consumer group, Empty Nesters (ages 60+), spend more per apparel item than any other age group, at $30.60, and are spending 25 percent more on apparel and basics than they did six years ago. This year, we’ll continue to follow the plus-size market – one in five women’s apparel purchases in 2006 was of a plus size. This market presents a great opportunity for retailers and manufacturers, as the concentration among the top 10 retailers is almost double that of the regular women's market! We’re also interested in monitoring the specialty channel as it gains importance to Canadians. Last year, specialty stores accounted for more than 56 percent dollar share of the girls' and women's apparel and basics market in Canada. Mass merchants were next with 17 percent, closely followed by department, which holds 16 percent share."
- Kaileen Millard-Ruff,
Director of Fashion
Food & Beverage
“Many of the food and beverage and foodservice trends I followed closely in 2006 have spilled over into 2007. Some key trends – or are they fads? – are health, which continues its shift from avoiding certain foods to adding healthful substances; food safety, namely last year’s E.coli outbreaks and the resulting consumer concern; cooking without cookware, and the subsequent increased attention on grills and slow cookers; and meals with fewer dishes involved. This year I’m also watching some interesting shifts in the foodservice market: breakfast away-from-home is the strongest restaurant segment out there right now; consumers are (finally) finding the balance between restaurants and home as food source, after 50 years of increasingly using restaurants; and meal assembly places are taking off – chains and independent storefronts where they “shop, chop, and mop” for you. Take-home lunches are a new growth segment worth paying attention to. And last but not least, I’ll continue to monitor a couple of contradictory food trends: the rise of big burritos, and also 100-calorie, portion-controlled snack packs!”
- Harry Balzer,
NPD Vice President
Foodservice
“For the French foodservice industry, 2006 was a year of ‘recovery,’ with visits increasing by 1.3 percent, which is consistent with a stronger economy. The main factors behind this growth were the fast food burger category, sandwich places, and quick service pizza. These three areas outperformed the market by attracting new customers throughout the year. The lunch business has always been crucial to the French foodservice market, but last year we also saw dinner get back on track with a 4 percent visit increase. On the product side, customers indulged themselves in 2006 – health concerns don’t seem to matter, since we watched consumption grow for beverages, burgers, pizzas, and fries. This year we’re paying attention to convenience foods for work and weekends away-from-home, and we expect it to be a key market driver. We are observing that food purchased and taken to eat at the workplace is growing about 10 percent; we see the same direction in weekend traffic, whether consumers eat at restaurants with their kids, or on-the-go.”
- Christine Tartanson,
Foodservice France Manager
Home
“Last year, we saw weakness in housing trends and an unexpectedly mild hurricane season. In the home improvement industry, these factors caused some retailers to lower their earning expectations in the second half of the year. Even so, consumers continued to pour money into their homes, led by Boomers and first-time homeowners. The pace of store openings by the big-box retailers slowed, and manufacturers began seeking alternate channels for growth. Local hardware stores showed signs of resurgence in popularity, which I’ll be monitoring throughout 2007. Also worth watching this year, outdoor living continues to grow, with consumers paying to have the features of their indoor kitchens replicated outdoors. Retailers are expanding their installation services to cater to the “do-it-for-me” consumer. Home improvement retailers are expanding their assortments to include housewares, electronics, and in some cases, even food products -- and manufacturers are responding with different approaches to merchandising, looking for cross-category selling opportunities.
- Mark Delaney,
Director, Home Improvement
Toys
“The toys and games market in France was flat in 2006, with a 0.2 percent increase in value for the year. The most successful category was Junior Electronics, with nearly eight percent growth, followed by Infant-Preschool and Other Toys, both up just over seven percent. Hypermarkets were down almost three percent for the total year, but specialists grew nearly 5 percent over the year. In 2007, we expect Spider-Man 3 and Transformers to help the market overall; it should be a good year, despite the the video games market’s pressure on sales of traditional toys.”
- Christophe Portal,
Analyst, Toys & Games, Juvenile, and Children’s License Markets for France and Benelux