CEA Sees Total Q4 Sales Growth Of 7%

Coronado, Calif. — The consumer electronics industry should see 7 percent revenue growth over last year's holiday season, to $48.1 billion in fourth-quarter sales, according to research from the Consumer Electronics Association (CEA).

The 14th Annual CE Holiday Purchase Patterns study was presented last week at CEA's Industry Forum, the annual four-day conference, at the Hotel Del Coronado.

CEA forecasts $22.1 billion will be spent on CE gifts this holiday season, representing 46 percent of total fourth-quarter revenue for consumer electronics. Total fourth-quarter sales will reach $48.1 billion — a 7 percent increase from 2006.

Joe Bates, CEA's research director, said last year the study predicted a 15 percent increase in CE sales at retail “and the industry wound up right around 15 percent.”

If this year's study is accurate, CE fourth-quarter sales growth will be half of last year's, but as CEA economist Shawn DuBravac said, “Consumer electronics will be the shining star of holiday retail sales, accounting for 22 percent of all gifts given. Two of the top five items on adults' holiday wish lists are consumer electronics, and four of the top five items on the teen list are CE devices, so today's hottest technologies will be on every holiday shopper's mind. Holiday sales will be particularly jolly for the video game category (hardware and software), laptop computers and the endless array of accessories available for your favorite product.”

The top five wish list items for all adult survey respondents are (in order): computers, peace and happiness, big-screen TV, clothes and money. Notably, the big-screen TV moved up in the 2007 survey to No. 3 from 11th in 2006. The teen list remained unchanged: clothes, MP3 player, video games, computer and cellphone.

“While overall holiday spending will increase, we found consumers are cutting back on decorations, home purchases and travel, but not gifts, especially electronics. The average CE gift giver will spend $358 on those gifts this season,” said DuBravac.

The survey also tracked specific consumer electronics consumers hope to receive. The top five CE gifts adults wish for are: MP3 players, notebook/laptops, video game systems, digital cameras and any type of TV. For teens, MP3 players, digital cameras notebook/laptops, computers and any type of TV round out the top five items on their wish list.

CEA said leading the “planned gift” list this year — a list of the CE products respondents intend to purchase for someone else — are video game systems, additional memory for cameras, MP3 players, DVD players and digital cameras.

“Both lists demonstrate strong industry trends; consumers want to connect with others, create additional content, be more flexible and enhance the products they already have,” said DuBravac. “Many households today desire greater portability and are replacing desktops with laptops. These laptops can do more than they could a few years ago, facilitating content creation. Video games and other devices are incorporating social networking applications and user interfaces, connecting like-minded consumers around the world. And accessories are enhancing all of these products, making the user experience better than ever.”

In questions from the audience about a variety of categories, Bates responded that GPS is a growing market but “has not hit the level yet to make our top 10 list.” The iPhone, which has sold more than 1 million units this year, should “create a lot of store traffic due to interest in iPhone and in cellphones.”

Asked to predict flat-panel pricing this holiday season, Bates said prices for HDTVs were down in last year's fourth quarter due to an inventory glut. While he still sees “door-busters” available in flat panel and in CE in general this year, Bates said he doesn't see a “bloodbath” for flat panels.

In looking at general economic trends, DuBravac said CEA research sees a recession probably at “25 percent chance ... and we see it trending down.”

The decline in the housing market continues, DuBravac said. Inventory “is going down” and prices are down 12 percent and should go down another 6 percent by next year. Housing values should rebound nationwide by 2010, excluding those markets that have been relatively unaffected by the crisis.

Still, DuBravac said that housing's woes “don't necessarily impact on decisions made at retail cash registers.” What is more of a concern is “job growth, which is trending down.”

And the depreciation of the U.S. dollar may have an unexpected impact, DuBravac said. “Canadians may come over the U.S. border and buy consumer electronics products” due to lower prices.

CEA is offering an online consumer guide offering information on how to purchase technology for the holidays at www.digitaltips.org.