Industrial Reporter

CONSUMERS are cashing in on cheap imported electronic goods. Sales of home-entertainment merchandise are surging as the stronger rand reduces prices sharply.

Recent cuts in interest rates have helped boost sales of electronic goods.

JD Group director Jan Bezuidenhout said prices had fallen as much as 40% on some of the goods his group imported.

Andisa Securities retail analyst Evan Walker said prices had come down to such an extent that sophisticated consumer electronic products such as DVD players were becoming affordable for the man in the street.

However, the steep rise in volumes did not necessarily mean a steep rise in earnings as margins were down in real terms. Walker said the drop in prices meant more products had to be sold to make the same kind of profit.

Bezuidenhout said his group gained more than it lost from the stronger rand.

Walker said retailers he had spoken to indicated sales volumes were up as much as 20% in some categories. The growth in sales could be seen in retail sales figures released by Stats SA. These figures showed sales growth increasing to 5,8% in July from 2,7% in June.

Walker said sales of television sets and video recorders were up 13% and sales of audio equipment were up 9%.

Another retail analyst expected the surge in sales to be maintained as long as the rand remained strong. Retailers focused on electronic goods, like the JD Group and Massmart, probably gained most from this growth in demand.

Other than the strength of the local currency and the drop in interest rates driving growth, the glut of products on the world market plus pent-up demand were also playing a part.

Walker said with the US economy struggling, makers of consumer electronic products were trying to get rid of products at highly competitive prices.