Bargains - that's what customers are gravitating towards when looking for ICT gadgets these days.
When times are not so good, market observers say consumers are more likely to be drawn to ICT equipment or solutions that would be somewhat beneficial for them such as those that are related to education, facilitate better communications, or enable them to optimise or enhance the present ICT tools that they have.
Low Wai Sun, organising chairman of PC Fair, says consumer spending on ICT greatly hinges on the overall financial market sentiment.
"The share market affects consumer confidence. A bullish market will encourage consumers to upgrade their ICT tools.
"Cheaper prices will also encourage consumers to spend." At present, the top sellers are LCD monitors, netbooks, notebook computers, storage and digital cameras.
Based on observations made in the last edition of PC Fair, which is the country's premier technology cash-and-carry event, consumers are obviously not shying away from making purchases, with visitors increasing some six per cent against the previous fair, according to Low.
"But compared to the previous year, sales revenue dropped, ranging from 20 to 30 per cent.
Only this month, some retailers are starting to see some improvement - maybe due to the slight recovery of the share market," he says, adding that the ICT retail market should start recovering at the end of the year, with full recovery in sight by the middle of next year.
Meanwhile, market analyst IDC expects to see initial signs of recovery on overall IT spending in Malaysia as early as next year, with investments rebounding to its precrisis level by 2011.
As cited in IDC's newly released report on IT spending in Malaysia, the firm foresees overall IT spending growth this year to be at -1.8 per cent. And if the economy does not pick up by the third quarter of this year, the firm says the figure could fall to -3 per cent.
Maggie Tan, associate research director of IDC Southeast Asia, says within the consumer space, IDC is expecting consumers in the mid- to high-income groups to continue contributing to the overall IT spending, particularly on new technologies or services such as Wi-Fi access and broadband.
She points out that consumer spending will most likely take a hit in the third quarter if job losses and closure of small and medium-sized businesses continue to be pervasive in the country.
"Sizeable job cuts in the manufacturing, financial and services industries will result in lower household income expenditure. If the trend spreads to major metropolitan areas such as the Klang Valley, IDC expects consumer spending on IT to drop significantly in the third quarter." Tan adds that IDC projects hardware will take a deeper fall as consumer spending in the second half of the year will be impacted, given that the mid- to high-income earners will likely cut back on unnecessary spending and focus on big-ticket expenditures such as home and car loans.
IDC's IT investment scenarios for the report are built based on several assumptions and fiscal factors. These include the exchange rate to remain stable, hovering between RM3.30 and RM3.80 to the US dollar. If the exchange rate fluctuates significantly and weakens, IDC assumes prices of IT imports and exports will drastically affect consumer and commercial spending, as seen in the Asian financial crisis in 1998.
Meanwhile, the local audio-visual market is still very much vibrant, although overall spending has dropped slightly compared to last year.
AV expert Dick Tan says many consumers are at a transition point, upgrading from the old cathode ray tube (CRT) to digital displays, which has resulted in an increase in sales in this segment of the market.
He adds that the price drops of certain products should encourage more people to spend.
According to him, products that are expected to do well in the AV market this year include LCD and plasma TVs, Blu-ray disc players, high-definition hard disk drive systems, lifestyle home theatre systems, audio systems with iPod/MP3 connectivity, and home automation systems.
He also thinks that the market should recover towards the end of the year, as the world economic situation begins to stabilise and improve.
This story was first published in The New Straits Times.
