Gadget sales are booming and the challenge for merchandisers is to predict which ones will catch on with the public TODAY'S consumers are offered a fast-evolving range of electronic products with a variety of imaginative features. The challenge for merchandisers is to predict which of the latest products and trends will catch on with the public, leading to sustained demand. 'Hong Kong is a good testing ground for new products, particularly mobile phones,' said Wilson Cheuk, merchandising manager of Chung Yuen Electrical. 'We know whether a product can sell or not in just a day or two after it comes on the market.' In his view, the market for various electronic products is far from saturated. 'In the past, one family might own two or three automatic cameras, but digital cameras have yet to reach that stage. Also, LCD and plasma televisions are replacing older TVs and people are changing their mobile phones frequently, since there is now a second-hand market. This means there is huge market potential,' Mr Cheuk said. In the past two years, the biggest increase in terms of numbers has been in the sale of new models of mobile phones, MP3 players and digital cameras, he said. Like other companies in the sector, China-backed Gome Home Appliances (HK) sources from Japan, Korea, Europe and the United States. General manager Wang Junzhou said the main considerations when deciding which products to buy from suppliers were brand, features and style. Price and potential market demand are also important. 'Brand is a key concern, since people who believe in that will have confidence in the products,' Mr Wang said. Before launching an item, the company tests consumer reaction in the stores. Frontline sales staff are also trained about the product's features. 'We see new features in electronic items almost on a daily basis, so staff must know exactly how each product is positioned in the market,' Mr Wang said. Retailers of electronic products tend to target consumers aged between 20 and 26, who are attracted by new features and usually have started to earn steady incomes. Sales of electronic toys are also booming and have created more jobs. These are mainly in the areas of programming, merchandising, material sourcing, quality control, electronic engineering, sales and marketing and logistics. Toymakers have adopted the latest technology - microchips, LCD screens and longer-life batteries - to make their products more interesting and interactive. The invention of lightweight, non-toxic plastics has also presented toy designers with more possibilities. 'Today, toys are closely linked to technologies. They are not only attractive to children, but also fun for designers,' said Rhys Bradley, head of regional sales and merchandising for Toys R Us Asia. 'We're going to see wonderful things as technology advances. It is amazing that one product can now have 10 or more languages and can create the sounds of different musical instruments just like an orchestra.' Mr Bradley said children were growing up trying to imitate their parents who use hi-tech gadgets. 'They are actually a lot smarter than we were at their age. You can't tell them what is cool - they'll tell you.' When buying electronic toys, the main concerns of parents are safety as well as the enjoyment factor and educational value, Mr Bradley said. Educational toys should continue to be a hit, but to take full advantage of the embedded functions, parents need to spend more time reading the manuals with their children. Bandai is one toy manufacturer and distributor that has invested heavily in research and development. Based in Tokyo, the company has an R&D department of 100 employees to develop electronic toys and software for game consoles such as Playstation, Nintendo and Xbox. It invented the virtual pet, Tamagotchi, in 1996 and sold more than 3 million of last year's version in Japan alone. Terry Kamohara, manager of the toy section in Bandai's Hong Kong office, said more talented people were being recruited to develop toy and package designs. He said the industry had experienced a couple of tough years, but the economy is slowly improving. The company is also shipping more toys to stores on the mainland, though counterfeiting is a still serious problem there.