Although he managed this diversity in a very strong growth period - for the market as a whole and for the Philips business -  this experience helped him to make a radical assessment of the UK business, when the market conditions rapidly deteriorated over the last few months.

"On my return to the UK, I found that the market greatly changed. The role of the internet has grown enormously, while the grocery stores started selling large electrical and CE products. The market became much more competitive and dynamic. As the trading conditions deteriorated - the changes happened very fast. In this situation Philips had to take a decision about the direction of its TV business. So far the Philips TV brand has been driven by volume. However, with 25% price erosion in the CE marketplace, we had to take a very different stand on how we are going to trade in 2009. We also had to review our delivery channels to asses where there is a commitment to sell up and engage the consumer and which channels only shift boxes."

A new market direction

Philips' CE strategy in the UK will differ form the company's strategies for other European markets. "Britain is the biggest CE market in Europe and a very important one for Philips, as there is the highest percentage of early adopters here. This makes it particularly suitable as a launch platform of such product innovations as the Philips Cinema 21:9 TV.  The reception of such products in the UK is likely to create a sort of ‘halo effect' in the rest of Europe. Meanwhile in France and Germany Philips will remain a mass market brand for a while, but average prices of TVs in these markets are higher."

In the challenging market conditions of 2009 Philips will continue investing in R&D and in the marketplace, bringing innovations into the market. "We don't want to be the biggest but we intend to be the best. With our other product categories we have proven that you can be a market leader in a niche market and do well out of it. Let's take for example our shaving portfolio. Dry shaving products constitute only 30% of the shaver market but we decided to focus on it and we have a premium position in this market, achieving healthy growth. This is a parallel to what we want to achieve in the television market."

Relationship with indies

In the past Philips didn't have a particularly strong relationship with the independent channel. Neil is committed to bringing a significant change in this respect. "The independent dealers occupy a particular space in the market place which is important for Philips, especially in the light of the company's new CE strategy. We are preparing ourselves to make a considerable investment in the independent channel. Inmans, our distributor in this channel, gives me regular feedback about the needs and requirements of independent dealers and I am confident in our ability to meet them. We will also be helping independents to make greater attachment sales.

"In the coming months, both manufacturers and retailers will have to be flexible and quick. We should not presume that the market will continue in the same fashion as before - the shape of the electrical market in 2010 could be totally different to that of 2008. We have to add value to the marketplace. There is no future in just shifting boxes. Therefore we are completely committed to the independent sector which I believe is our biggest ally in making this happen."

Printer friendly version

Email this article to a friend

Bookmark this

---