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With the economy clouding everyone's crystal balls, forecasts from portable GPS suppliers of total sales for 2008 vary widely from a low of 16 million units to a high of 24 million units in sales to U.S. consumers.
It is still unknown just how much of a luxury or necessity personal navigation devices (PNDs) will prove to be this year, and with 60 percent of PND sales transacted in the fourth quarter last year, the outcome of this year is very much in question.
ABI Research believes TomTom's prediction in July — that 20 million PNDs will sell to U.S. consumers — is still the benchmark. This compares with sales of 10 million to 13 million units last year, which would place growth at about 75 percent in units.
Mio is less optimistic. Sales and marketing senior director Kiyoshi Hamai noted, "I'm still hearing people say 20 million but internally we're thinking 16 to 18 million units." He explained, "While the numbers still don't show any major impact, we are all watching it very closely because consumers don't have the discretionary income they used to have ... but having said that, there could be an upside. It could be creating some pent-up demand and could turn into a very strong December."
Two other supplier said sales could climb as high as 24 million units.
TomTom noted that PND growth has slowed in recent months according to The NPD Group, but marketing development VP Tom Murray believes "the PND category will be among the most popular CE categories this holiday season and that year-on-year sales growth will remain robust."
PND supplier Nextar said retailers will help drive sales through aggressive promoting. "I think it will be 20 or 24 million because retailers will force it," said business development and operations VP Andy Frankel. His theory is that retailers last year invested in a wide range of categories such as digital picture frames, but this year they "will bet on fewer racehorses, and a lot are putting their fourth-quarter eggs in the GPS basket," he said, noting that if sales prove sluggish, retailers "will do everything they can do get people into the store."
Some buyers told TWICE they are ordering more cautiously than they might have in a better economy. Crutchfield is shaving 10 percent or 20 percent off of orders on high-end models and ordering 25 percent less deep on the entry level, compared with what it might have ordered two months ago, it said.
Merchandise director Tom Bancroft expects a boom in sales in the fourth quarter, especially with prices lower than last year. "The only thing I'll back off of are the more risky positions at higher price points and taking a really deep position on the entry level."
Car Toys merchandising senior VP Dan Jeancola pointed out that the "sophomore year" of very hot categories such as plasma TVs and satellite radio often fall short of expectations. "There was the big plasma Christmas and the next year, it didn't happen — the same with satellite radio. Stern got on Sirius and the next year was a bust." But he added, "You only have about 11 percent penetration [in PNDs] on a national level. Price points will fall into typical gift-giving prices, so it may buck the trend."
In addition, more high-volume retailers are expected to stock PNDs this Christmas, including CVS, Supervalu (which operates chains including Albertson's, Shop 'n Save and ACME) and Ace Hardware, according to suppliers. All three did not respond to TWICE inquiries.
Dominique Bonte, director of ABI Research, said the economy has not had an impact on PND sales at present and he predicted sales in the 20 million to 21 million unit range. "We haven't seen a real slowdown. Maybe it still will come. We may go into an even worse economic climate. We'll have to see," he said.
As of August, NPD said PND sales year-to-date are tracking ahead of the same period last year by 43 percent in dollar sales to U.S. consumers and 116 percent in unit sales. The growth is slower than in 2007, when PNDs were arguably the No. 1 selling consumer electronics product with unit sales up more than 300 percent and dollar sales up more than 100 percent from 2006. During the fourth quarter last year, sales soared by an estimated 400 percent.PND Retail Sell-Through
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.