CEA Predicts 9% Holiday Sales Increase

LAS VEGAS— The holiday season's gift-giving allure will continue to shine through bleak economic factors in the fourth quarter, with the Consumer Electronics Association (CEA) predicting a 9 percent increase in manufacturer shipment revenues and an 8.8 percent gain in sales for the entire year.

CEA's industry analysis director Sean Wargo presented the Annual Holiday Survey during the organization's Industry Forum last week, which has historically been accurate, yet this year showed the contradictions in U.S. consumer attitudes today.

While the survey said consumer confidence is the “lowest ever,” product mix has shifted toward higher prices, overall gift plans are up 22 percent, interest in CE is the same overall (with certain categories being up), and the number of people to buy for is down.

The survey involved random telephone interviews with 1,000 U.S. adults during late September, asking about intentions to buy CE products as gifts during the 2005 holiday season. It showed that 61 percent of those surveyed said the economy is worse than last year, the highest since 2001. And the number of consumers who planned to spend less on gifts spiked to 37 percent, the highest total since the survey began in 1994. Last year 25 percent surveyed said they would spend less on gifts during the holidays.

The reasons for spending less were a familiar, dreary list: higher cost of living, income decreases, weak economy, a general lack of funds, and, one of the major factors, higher costs of energy.

Yet when the survey adds up holiday spending plans, between gifts, food, travel and other purchases, those surveyed said they will spend 22 percent more on gifts and 14 percent more overall during the period. During the fourth quarter, about 50 percent of all CE sales volume is generated by gift purchases. And compared to last year, A/V wholesale prices are up 9.6 percent, according to the CEA report.

The top five CE gifts to be purchased during the 2005 holiday season (starting with No. 1) are: portable MP3 players, digital cameras, video game systems, cordless phones and home DVD players. That compares to the top five of 2004 which were: digital cameras, game peripherals, cellular phones, cordless phones and portable CD players. (See Top 10 chart on p. 1.)

The report also showed that 80 percent of consumers who were surveyed consider themselves to be “consistent CE gift buyers.” Of that group, 61 percent said they would buy a video product, 56 percent communications, 54 percent PC/games and 48 percent for audio. (All of the categories include accessories sales for the first time in this survey, except for PC/games, where accessories were not a component of the survey.)

The average number of CE products consumers will buy during the holidays as gifts will be 6.5 (7.6 with accessories), which is just about the same as last year, and consumers will be buying for the same number of people as last year, around 14 individuals.