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CE Is Holiday Gift Of Choice, So Far

12/17/2004 02:21:00 PM Eastern

New York — Consumers have made electronics the gift of choice this holiday season, filling stores, and the coffers, of CE dealers coast to coast.

Absent a hot toy or apparel trend, and fueled by lower prices on previously out-of-reach products, shoppers are devouring stocks of digital cameras, MP3 players, notebook computers and enhanced-definition plasma TVs, triggering spot shortages of flat-panel displays, iPods and other items.

While sales and traffic at CE stores are outpacing retail overall, dealers are not without disappointments. Component audio continues to lag the industry, retailers reported last week, while sales of camcorders, car audio, and movie and music software are also soft.

What’s more, due perhaps to market saturation, last year’s door-buster darling, the basic DVD player, is no longer a holiday favorite, supplanted instead by portable and recordable DVD devices.

“The mix of hit products is narrow but deep,” observed Roger Heuberger, executive director of the Progressive Retailers Organization (PRO Group), whose members include Crutchfield, Ken Crane’s, Abt, Bjorn’s, MyerEmco, Huppins, 6th Ave. Electronics and Tweeter.

Top PRO sellers this season include “gifty items” like iPods and accessories, XM handheld receivers and portable navigation, Heuberger said. Meanwhile, an “insatiable demand” for ED plasma TV, kindled by dramatically lower prices, has left that category in short supply, he reported, although word is that sub-$1,700 models, which are not sold by PRO, are experiencing high rates of return, he said.

Geographically, business is “really good in most parts of the country,” particularly in California and the Northeast, Heuberger noted. “By and large, it’s a pretty solid season.”

Despite some unusual choppiness, The NATM Buying Corp., comprised of such regional heavyweights as Bernie’s, BrandsMart, Boscov’s, Conn’s, Cowboy Maloney’s, Nebraska Furniture Mart and R.C. Willey, is also enjoying solid holiday sales, beginning with an exceptional Black Friday weekend.

“It’s been a strange December, like a roller coaster, with some very strong days and weaker days,” observed executive director Bill Trawick. Nevertheless, group comps are up for the first 13 days of the month, he said, “and I’m confident that it will be a strong season.”

Fueling that faith are brisk sales of flat-panel, microdisplay and combo unit TVs, notebook and desktop computers, and portable DVD (“on fire”) and DVD recorders (“phenomenal numbers”). The group is also enjoying a “pretty strong” white-goods business this season, driven by new front-load washers and sales of multi-SKU appliance packages.

Those gains will more than offset weakness in tube TVs, traditional audio, basic DVD players and camcorders, Trawick said.

Like PRO Group, NATM has experienced shortages and delayed shipments from a majority of vendors in a number of categories, although the group has access to ample inventory to see it through the season, he said.

Among national chains, Best Buy projected its December comp gains at between 3 percent and 5 percent, driven by continued strength in DTV, MP3 players, digital cameras, notebook computers and appliances, chief financial officer Darren Jackson said.

Jackson also described the period as more promotional than last year, which executive VP/general merchandise manager Ron Boire confirmed in a conference call last week. “Our competitors get more competitive week to week,” he told analysts, although he described the discounting as more reactionary than strategic.

“There’s a general choppiness in the numbers,” Boire said, “more rifle shot-ing,” with individual markets or particular categories “heating up” for a limited time.

Boire also acknowledged softness in CD and DVD software sales, as did Circuit City. Both blamed the downturn on a weaker new release schedule and slower traffic, which Boire attributed to the impact of high fuel prices on lower income consumers.

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