According to Plimsoll, which has 16,000 customers worldwide who rely on its regular reports on the market, price deflation is hitting the bigger companies where it hurts - in their pockets. It started with air travel, moved to electrical goods, used cars and even insurance. And now it has arrived in the sound equipment industry.
14 of the top 50 firms are losing money, while 27 are making less profit than last year. Salaries alone at the top 50 companies eat up 19% of sales. In general they pay their staff more and are less productive.
Plimsoll's senior analyst, David Pattison, said: "Fourteen of the bigger companies are displaying symptoms of extreme tiredness. But the big companies are desperate not to miss out on the new profit and growth areas, so they are busy hunting down the emerging firms. At Plimsoll, we have identified why this is happening, and who it is happening to."
The sound equipment business is just the latest in a long line of industries to be affected by falling prices, claims Plimsoll. The cost of used cars has fallen by an average 3.6% since 2000. Over the same period, the price of IT equipment has dropped by 20%, photographic gear by 8%, clothing by 6% and toys by 5%. At the same time, the cost of production has risen by 1.3% in one year alone, between 2005 and 2006.
The findings are contained in a special two-part analysis of the industry. The first part of the study focuses on the top 50 sound equipment companies and sets their performance within the context of the overall market, while the second identifies and charts the progress of the up and coming firms outside the elite 50.
(Jim Evans)
