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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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