1. Retail market: consumer technology Briefing notes and sales support for news media sales teams

2. This deck is split into three sections: Section 1 An overview of the Australian retail market The 2015 Media i Industry Survey asked agencies “what are the most important factors when dealing with media owners”. The most common factor (52% agreed ) was “understanding of your client’s business and category”. Section 1 of this deck won’t make you an instant expert, but it will help get you up to speed on the most important facts about the category. Section 2 Focus on consumer electronics This report will focus on consumer electronics. Additional reports on various advertising verticals feature on the NewsMediaWorks website. Section 3 Support slides for sales presentations Every great sales presentation is tailored for each client, but some points fit most clients within a category. Section 3 contains research about how consumers make electronics purchases, and how news media can help drive sales. What’s in this deck?

3. Section 1 Retail market: an overview

4. Retail: core of the consumer economy Turnover: $24.9bn month Almost 135,000 retail businesses employ 1.3m staff Sources: Australian Bureau of Statistics: 8501.0 - Retail Trade, Australia, March 2016. 6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, 2016. 81650 Counts of Australian Businesses, including Entries and Exits, Jun 2011 to Jun 2015.

5. Retail growth prospects for 2016 Retail growth was strong for most of 2015 despite less than expected growth for the Christmas/post- Christmas sales period. Forecasts for the remainder of 2016 are for continued growth albeit at a reduced rate. Source: www.trading economics.com/australia/retail-sales-annual/forecast; ABS

6. Retail: key sectors Retail $24.9 billion/month Food $10.1bn Household goods $4.4bn Cafes, restaurants & takeaway food $3.4bn Clothing, footwear & accessories $2.0bn Department stores $1.6bn Other retail $3.4bn Food retail (supermarket/grocery, liquor, specialty food): 43% of all retail spend Source: Australian Bureau of Statistics 8501.0 - Retail Trade, Australia, March 2016. Household goods (furniture, housewares, electrical/ electronic goods, hardware, building & garden supplies): 17% Cafes, restaurants & takeaway : 14% Clothing, footwear, accessories : 7% Department stores : 6%

7. Retailers: big spenders on advertising According to the latest Advertisers Report, retailers make up 4 of the top 5 advertisers, and 11 of the top 25. Retail accounts for 47% of total ad spend for the top 25 advertisers. –Retailers are also big spenders on news media, accounting for almost half of the top 25 news media advertisers. Source: Ebiquity, Advertisers Report, 2014.

8. Section 2 Consumer Technology

9. Consumer tech: growth trajectory Estimated revenue: $7 billion (2015-16) Forecast annualised growth rate (2016-20): 2.4% Sources: BMI Research, Consumer Electronics Report, Q2 2016; IBISWorld, Domestic Appliance Retailing in Australia, March 2016. Despite tough retail conditions over the past few years, the consumer electronics market is expected to return to growth over 2016-2020.

10. Consumer tech: top retailers JB Hi-Fi and Harvey Norman remain the dominant electronic retailers –Almost half of the population (46%) visited a JB Hi-Fi or Harvey Norman retail outlet in the past 12- months. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

11. Consumer tech: market penetration Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016 Australia has one of the highest levels of computer penetration in the world, at 95%. Mobile phone penetration is 94%, and some 79% of households own a digital TV, 3D TV or smart TV.

12. Consumer tech: short replacement cycle While a saturated market leaves little scope for unit growth to drive broader industry performance, high household incomes, combined with a strong bias towards premium devices, is expected to drive consumer demand in the medium term. o Example: the current replacement cycle for mobile phones is 15 months. High penetration rates has meant that the consumer electronics market is becoming replacement centric Source: BMI Research, Consumer Electronics Report, Q2 2016.

13. Consumer tech: consumers seek advice 41% (7.4m)of consumers seek advice from others before purchasing electronic devices. Consumers typically seek a high level of advice before a purchase Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016

14. Online: strong and growing Estimated revenue: $2.1 billion (2015- 16) Annual growth (2011-16): 19.5% Forecast annual growth (2016-2021): 10.0% Source: IBISWorld, Online Consumer Electronics Sales, April 2016. Lower online price points combined with growing consumer comfort with online shopping has driven online electronics sales

15. Online sales. Notebook sales (particularly high-end, slimline notebooks and hybrid devices). Preference for premium devices. Shift toward replacement centric market. Hybrid devices. Demand for Ultra-HD TV sets. Consumer demand for retailers to demonstrate ethical and sustainable supply chains. Wearable technology gadgets, such as the Apple Watch. Virtual Reality headsets, such as the Oculus Rift. Sales of tablet devices (volumes have declined sharply following rapid growth in 2011-2014). Digital camera sales. Spending in the smartphones segment. Overall AV spending (following the LED/LCD TV set upgrade boom). Electronics industry: trends Sources: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; BMI Research, Consumer Electronics Report, Q2 2016; IBISWorld, Domestic Appliance Retailing in Australia, March 2016.

16. Section 3 Support slides for sales presentations

17. The following slides provide general supporting arguments to assist sales teams when building client-specific presentations. The purpose is to open discussion, to demonstrate a basic understanding of factors that drive consumer technology sales, and to show how news media can help to influence the sales process. These slides are intended to be used in a presentation after recapping the brief, and before presenting analysis and recommendations tailored to the specific client. Needless to say, they can and be should be adapted to suit your particular presentation requirements. About these slides Recap client/agency brief Supermarket industry support slides Client specific analysis Recommendations

18. Strong demand for consumer electronics 4.2million consumers shopped at an electronics store in the last three months. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

19. News media readers are tech lovers Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only. No matter what types of tech gadgets and electronics, advertisers will find a route to their target audience through news media. Nine out of ten electronic store customers, about 3.9 million people, engage with news media – making it a powerful advertising platform for retailers.

20. Readers are early adopters Some 33 per cent of readers believe it is important to stay up-to-date with the latest tech gadgets and product innovations. News media reaches early adopters of technology products. Some 92% of those who are regularly the first person in their social circle to try a new tech product read news media. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only. News media enables advertisers to reach technological innovators and enthusiasts

21. Reach key prospects with news media Over the next 12 months, 8.3 million readers intend to buy technology products, including: TV set : 1.5m Laptop : 1.2m Tablet : 1.2m Gaming console : 1.2m Netbook : 1.1m Wireless speakers : 1.1m Set-top box/Apple TV/Foxtel : 1m Smart watch : 1.1m Home theatre system : 833,000 Digital camera : 590,000 Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

22. News media attracts high-quality audiences News media readers spend 32% more on home tech than non-readers. o Readers: $386 vs. Non-Readers: $292 (last purchase value) Print newspaper readers spend even more, confirming their credentials as a quality commercial audience by splashing out $401 on their last purchase. News media reaches nine in ten of the top 20 per cent of consumer spenders on electrical goods Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

23. One in five consumers identify newspapers as the most helpful media to turn to when they’re in the market for electronic goods. Some 23 per cent more people say newspapers are the most useful media to help with tech purchases than online advertising and social media. The media shoppers rely on Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only. Consumers consider newspapers more useful than online advertising or social media when deciding on tech purchases

24. Consumers’ liking for news extends to the various digital formats too, with 71 per cent of readers having visited a electronic retail outlet within the last month. Some 50 per cent of readers of digital news media (6.4m) are actively planning to purchase technology in the next 12 months. Consumers engage with digital news Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

25. Wearables 913,000 news media readers plan to buy a fitness monitor (e.g. Fitbit or Garmin) in the next 12 months, while another 1.4m are considering a GoPro and a further 1.1m are planning to buy a smart watch. Consumers of digital content are the most likely to buy these devices – they are 15 per cent more likely to own a fitness monitor than a non-reader, and 6 per cent more likely to own a smart watch. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only. News media reaches 91 per cent of the wearables market

26. News media readers influence others Sources: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only. News media reaches 91 per cent of those who are regularly asked for their opinion on technology products, and they encourage family and friends to buy based on their own experiences. News media reaches: 4.7m readers who encourage others to buy products. 4.1m readers who are often asked to share their opinions about gadgets. Retailers influence the influencers by advertising with news media

27. Readers respond to online offerings News media reaches 92 per cent of online shoppers. Our digital audience is 13 per cent more likely to have shopped online in the last month than non-readers. Readers are among the top online spenders across most measured retail categories Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

28. Print 77% Digital 72% It’s not “Internet vs. newspapers”. It’s “Internet and newspapers”. The combined reach of print and digital news media: 93% of people who have shopped at an electronics store in the last month. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

29. Client specific analysis & recommendations This is the point to bridge to a client specific discussion. Each presentation will need to be individually tailored to suit the client and their objectives, but the logical flow from here is to move on to Analyses that address the client’s specific situation, challenges and opportunities. Solutions using your inventory, giving clear reasons why they are appropriate to the client’s specific needs, and suggestions on how they can be used most effectively.

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