On the verge of a holiday season facing predicted sales slumps in an unstable economy, I’d like to think that we can be realistic while staying positive about the fate of the CE industry. While we’re hearing stories of retailers and manufacturers cutting down on inventory, and holiday sales forecasts lower than they were in previous years, there is also reason to believe that consumer electronics, and more specifically televisions, will continue to sell.
The Consumer Electronics Association (CEA) released a report last week that forecasts 3.5 percent growth in electronics shipments during the final quarter of the year compared with last year. However, the results also indicated an expected 11 percent increase in demand for mobile phones, a 3.9 percent increase in demand for audio and video equipment, including televisions, and a 5.6 percent increase in the video game business.
The CEA also announced earlier in the month that consumer electronics were up 1.2 percent in August from the same period last year while sales of home furnishings were down 6.8 percent, and auto sales were down 13.5 percent.
In particular, we think the television market will hold up better than many other consumer electronics products. In fact, DisplaySearch has kept its global forecast of 105 million LCD TV sales for this year unchanged, and it stated that next year LCD TV sales may grow by 25 percent to 131 million sets.
There are a lot of things fueling the growth of the TV category. The DTV transition is an obvious factor, but if we take a look at the evolution of TV technology, we see many people replacing their old CRT TVs with flat-panel TVs.
Factors like the growing popularity of gaming consoles with 1080p capability as well as an expected aggressive push this year in Blu-ray products also contribute to high-definition popularity as consumers move from CRT into new flat-panel technologies. As technology continues to get better and thinner, even people who purchased flat-panel TVs a few years ago want to upgrade to the most recent models or buy a new TV for the bedroom.
Additionally, flat-panel televisions are one of the only consumer categories where prices continue to drop every year. The television industry will benefit from larger year-over-year price reductions than other technology categories.
The consumer electronics industry is not as far along in the product lifecycle for flat-panel TVs as it is for other technologies, such as digital cameras.
And television still represents a good value for the entertainment dollar. As economic times are more difficult, families tend to spend more time at home, inevitably watching more TV together. People may see purchasing a new TV as a higher priority than traveling and going out, especially with the approaching DTV transition.
Of course, we’re remaining vigilant, making sure we’re offering customers a great value while watching the numbers closely, but we’re optimistic the CE industry can still grow, even in these tough times.
