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CE Gift Sales To Rise 8% In Q4, Says CEA Study

– Consumer electronics gift sales will grow 8 percent during the fourth quarter
from the same period last year, but deep discounts and special retail events
will be needed to get consumers into stores and shopping online.

That is from the Consumer Electronics Association (CEA), which
issued its 16th Annual CE Holiday Sales Forecast this morning at the
CEA Industry Forum at the Arizona Grand Resort, here.

Shawn DuBravac, chief economist/research director, and Steve
Koenig, industry analysis director, presented CEA’s report, which detailed the
effects of the recession on the economy, the U.S. consumer and the CE industry.

Given the economy, it is surprising that four out of five adults
(80 percent) plan on buying CE products this holiday, the highest results in
the 16 years of the survey.

Overall gift spending this holiday season will increase 4 percent
over last year despite a drop in overall holiday spending. Spending on CE will
also increase over last year. Consumers plan to spend an average of $222 on
consumer electronics this holiday, a gain of 8 percent over last year. Half of
consumers (48 percent) also plan to buy a CE product for themselves this
holiday, the CEA study shows.

“Pent-up demand for technology products is evident in consumers’
gift wish lists and holiday CE purchase plans,” said Koenig said. “Some 20
percent of consumers say they plan to spend more on gifts compared to last
year, with electronics leading the way.”

“Consumers remain wary but there are signs of optimism in our holiday
forecast,” said DuBravac. “As the holiday approaches, consumer appetite for
technology highlights the resiliency of the tech sector.”

Consumer electronics comprise four of the top 10 items on adults’
holiday gift wish list, with computers and video games ranking No. 2 and No. 3,
respectively, behind clothes. Televisions and digital cameras also made the
list. Several emerging technologies, such as Blu-ray players, e-readers and
netbooks, are among the most wanted and hottest gifts this season. These
products are in the adults’ top 10 CE wish list for the first time, joining
such mainstays as notebooks, portable MP3 players and flat-panel TVs. Netbooks
are another hot category, especially among teens, ranking in the top 10 CE gift
wish list of that age group for the first time. Portable MP3 players, video
game consoles and digital cameras are among the most popular gifts consumers
are planning on giving their friends and family this year, CEA said.

“Some of the hottest gifts this holiday will be CE products new
to the market,” said Koenig. “Retailers who dedicate shelf space to new
technologies, like e-readers, will likely be rewarded with stronger foot

But the survey also showed that consumers have cut back on major
purchases during the year, and CE was affected, along with major appliances,
furniture and cars (until the “cash for clunkers” program kicked in).

Industry insiders who were interviewed said fewer consumers have
visited stores, and 60 percent believe it is the “new norm” or a long-term
change that consumers will be hesitant to buy for some time.

Typical gift giving and holiday shopping will be down in several
non-CE categories, such as home decorations, greeting cards, travel and others,
which makes the possible gain in CE gift giving all that more surprising.

CEA said all types of retail promotions – event-driven sales,
specials and the like – are driving consumers to CE stores and online and
should continue to do so in the fourth quarter, meaning that margins will
suffer as a consequence.

And the survey showed that one-third of CE insiders interviewed
were pessimistic about Black Friday and the weekend after Black Friday, predicting
sales will struggle vs. last year.

But the industry seems to have gotten consumers to plan holiday
spending before Black Friday, the survey indicated.

The top motivator to buy is still price (91 percent), but ease of
purchase (85 percent), past experience (85 percent) and ease of returns (84
percent) mean that “consumers are not experimenting” when it comes to where
they will shop for the holidays, DuBravac and Koenig said.

The study showed that 67 percent will shop at mass merchants, 60
percent at electronics stores and 41 percent online.

Accessories will play a major role in CE gift giving this year,
in video games, which are high-margin items, as well as memory cards, which are
the No. 1 overall planned CE purchase for the season, at 29 percent.

“Consumers will be looking for deals, and retailers will be
willing to make deals to drive traffic,” DuBravac said. Sixty-nine percent of
consumers surveyed said they are looking for good deals, 45 percent will shop
at discounters and 42 percent will buy a less expensive product. 

Retailers are also worried about low traffic, price declines,
fewer new “must-have” products, not enough inventory (or too much) and even an
outbreak of the H1N1 virus, which could curb sales.

The study was conducted in September 2009. It was designed and
formulated by CEA Market Research. The complete study is available free to CEA
member companies at
Non-members may purchase the report for $199 at