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NPD, Discount Chains Report Soft CE Holiday Sales

1/06/2011 03:40:02 PM Eastern

LAS VEGAS - CE sales
within the broad brick-and-mortar channel fell five percent over the holiday
season, the NPD Group reported, while national discount chains posted mixed
December results for the category.

NPD attributed the
decline in part to tough year-over-year comparisons and a diverting of TV
dollars by video gaming and mobile devices like smartphones, tablet computers
and e-book readers.

Among the discounters,
Target said net sales rose 1.4 percent to $9.9 billion while comparable store
sales edged up 0.9 percent due to "softness" in CE and other categories.

At Costco, CE comp sales
fell by the high single digits due to TV price declines and a modest
mid-single-digit gain in unit volume, plus weakness in cameras and PNDs. Net
December sales rose 11 percent to $9.2 billion, and U.S. comp sales rose 3
percent excluding gasoline, Costco said.

 Fellow warehouse club BJ's said net sales rose
7.3 percent to $1.3 billion and comp sales increased 1.4 percent excluding
gasoline. Top performers included computers and video games, while packaged
video was among the weakest.

BJ's also announced plans
to shut five stores this month and restructure its corporate and field
operations in an effort to cut costs.

Separately, hhgregg
projected a 6.2
percent decline
in comp store sales for the quarter ended Dec. 31.

Best Buy will release its
December 2010 results on Friday.

NPD, which track
brick-and-mortar sell-through at the point of purchase, said CE sales excluding
video games and mobile phones totaled $10.3 billion for the Nov. 21-December 25
period, and slipped 4 percent to $14.9 billion for the 9 weeks prior to
Christmas, due in part to tough year-ago comparisons.

"Record sales in 2009
across major categories such as notebook PCs and TVs, combined with a
significant slowdown in the pace of price declines created a difficult headwind
for the industry in 2010," observed NPD industry analysis VP Stephen
Baker
.  "With retailers
and manufacturers focused on price maintenance, tech consumers ignored early
season promotions, and instead keyed in on the traditionally price-aggressive
deals offered during Black Friday and the week before Christmas."

As a result, he said, sales
for the first three weeks of November and the first three weeks of December
were "significantly weaker than the traditional bookmark shopping
periods." 

Within TV, unit sales
rose more than 5 percent for the four weeks ended Dec. 25, while revenue
declined by 2 percent. Plasma, which "delivered great value in large sizes,"
enjoyed a 32 percent increase in unit volume while revenue declined 8 percent
as average selling prices (ASPs) fell almost 15 percent to $728, NPD
reported. 

The 32-inch LCD, 2009's "hot
product," was not nearly as popular in 2010, NPD found, with unit volume
dipping 2 percent year over year. Instead, the fastest-growing flat panel TV
segment was the 46-inch to 47-inch category, which increased 31 percent in units. Sales
of TVs above 50 inches also showed strong growth, jumping 21 percent as new
technologies like 3D, Internet connectivity and LED backlighting fueled demand.

 Tough year-ago comparisons for the PC market,
which anniversaried the launch of Windows 7 and strong netbook demand, was
compounded by the "tremendous success" of tablets, NPD said. The market
research group previously estimated that tablet cannibalization rates could run
as high as 15 percent, likely impacting the sales of close to 1 million PCs
during the holiday season. 

As a result, notebook
unit volume fell 9 percent with little to no discounting, as ASPs remained
flat. Netbook unit volume declined 38 percent versus last holiday and accounted
for 19 percent of Windows notebook sales, down from 27 percent during the prior
year.  Desktop sales also took a hit, dropping 16 percent in units.

Among the top growth
categories were stereo headphones, which saw a 30-percent unit and 48-percent
dollar increase over 2009.  DSLR cameras grew 16 percent in units and 23
percent in dollars, while Blu-ray unit volume jumped 27 percent and hard drives
were up double digits for the second straight year.

Taking it on the chin in
unit volume were point-and-shoot cameras, which declined 9 percent; MP3 players,
down 8 percent; GPS, which fell 24 percent; and digital picture frames, down 24
percent.

"The industry suffered
during the 2010 holiday season as the high-volume categories such as cameras
and MP3 players experienced unit volume declines," Baker said.  "Though
more niche and converged devices were attractive to consumers looking to
replace older products, the volumes to drive industry growth simply weren't
there."

 

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