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So if it’s a slowdown…what happens in Europe?

by Paul Gray, Director of European TV Research

I’ve been conducting a thought experiment on what a USA consumer slowdown will mean for the TV market in Europe. Historically, Europe tends to enter recessions after the USA—often up to a year later. In general, this is as export contracts are fulfilled and then not renewed. US consumers get the BMWs, Porsches and Range Rovers they have ordered, and afterwards it all goes quiet.
 
In 2006, European consumers decided that the time was not right to buy a flat TV (with the exception of the Brits who were enjoying an Anglo-Saxon credit binge.) So TV setmakers looked for the only market to fill the gap—and the price war (and sales peak) of late 2006 was the result.

This time round, we could see the reverse—Europe’s currency is high, making it an attractive market to sell into. European consumers, while they may not feel exactly wealthy, certainly don’t feel too badly off either. This is especially the case in Germany, where confidence is back after several hard years. Germans are rediscovering what they liked about quality brands. The UK has been the largest TV market in recent years although historically, Germany was the largest TV market in Europe—and with a population of 80 million compared to the UK’s 60 million—it should be. The UK is in a different position—typically it goes into recession before Continental Europe, reflecting its stronger trading ties with the USA. Already house prices are beginning to fall, the credit squeeze has caused the collapse of a mortgage bank and the British have more consumer debt per head (at over $9,000) than Americans.

The fragmentation of Europe’s markets means that it is unlikely that a Vizio will happen over here but a quiet, solid surge looks likely—except for the British, who will be working overtime to pay off their debts.

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