After years of staggering sales growth, and a serious blip during the crisis, electronic products are back in demand

LIKE most sectors of the economy, the consumer electronics retail market suffered a steep drop in demand at the height of the economic crisis last year, but retailers say that buyers have started to return in recent months, boosting hopes of a swift recovery.

Big retailers including K-four and Sunsimexco along with smaller second-hand sellers said they were hopeful for the remainder of 2010 after what proved to be a difficult period, as disposable income evaporated on the back of subdued exports, a lack of tourists and dwindling foreign investment.

“I have seen improvement early this year…. My sales have increased between 10 and 20 percent after dramatically declining around 60 percent last year, although we tried by decreasing prices by about 50 percent,” said Phi Meng Leang, senior sales executive at K-four.

The real estate downturn in particular fuelled the decline in consumer electronics last year, said Sunsimexco Ltd Marketing Manager Taing Sothearith.

I don't care about competition from brand new products ... it all depends on people’s income."

“Sales were the worst last year but this year I feel things are picking up,” he said. “The world economy has recovered and Cambodia’s economy has started off better compared to last year so a lot of foreign investors are eying Cambodia.”

The real-estate sector was seen as a spur for consumer electronics in that new homes meant new appliances in many cases, added to a market that had seen steep gains on both land and property across the country.

Speculators that had made money on buying and selling property before the slump were suddenly able to afford cars, flat-screen televisions and expensive computers, say analysts.

But with the property market one of the last areas of the economy to show signs of recovery, the fact that consumer electronics have recovered to some extent already without the property factor suggests there is still ample room for growth.

Sok Chea, owner of an audiovisual retail store on Phnom Penh’s Kampuchea Krom Boulevard, said her sales were down as much as 70 percent last year – on televisions, VDC players and amplifiers – but like other stores she has seen a recent resurgence.

“I think people are earning more after the crisis … they can earn a bit more but at the same time be careful with expenses,” she said.

Just down the same street – a prime area for second-hand consumer electronics sellers – Lim Meng Tong agreed that spending power had rebounded.

He said over the longer term sales had improved markedly since around 2005 despite what he said was an increasing desire among consumers to purchase new rather than second-hand electronics goods.

“Moreover, increased demand has come with growth in entertainment clubs, restaurants, hotels and cafes,” he said.

Mean Leang agreed that K-four had experienced strong demand from entertainment clubs – the number of which has grown steadily in the capital over the past five years – and from wealthy families.

K-four now has three branches in Phnom Penh and one in Siem Reap, selling its imported electronics products from the likes of Samsung, Sony and Toshiba. All are shipped from Singapore.

Agricultural remedy

Taing Sothearith forecast that sustained growth in consumer electronics in the coming months would be driven by rising investment mainly in the agricultural sector – the one area of the economy that actually grew during last year – but also in other key sectors.

Sok Chea said that were the economy to maintain strong growth – as was the case before last year – then demand in the electronics sector would be sufficient to grow sales for both his second-hand wares and brand new imported items sold at the large retailers.

“I don’t care about competition from brand new products because it all depends on people’s income. If someone earns a lot, they can afford something brand new, but if they earn just a bit, they can purchase my products at a cheaper price.”

As Cambodian incomes grow, the lower end of the earning scale will be pulled up to a threshold at which point they can generate disposable income, which creates demand for consumer electronics.

The economic crisis was therefore just a blip amid an otherwise upward trend, according to electronics retailers.