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CEA Predicts 3.5% Increase In Q4 Sales

Well, there will be a holiday gift giving season in 2009 for consumer electronics after all, according to the Consumer Electronics Association (CEA), which is predicting a 3.5 percent increase in fourth-quarter sales.

But the 3.5 percent increase predicted in the 15th Annual CE Holiday Purchase Patterns study, released at the CEA Industry Forum, is half of what the same report predicted for last year’s holiday season.

Mobile phones will provide almost half that growth at 1.7 percent. Given the bleak economic news in recent weeks, this survey is a bit of good news for the industry.

But the survey also shows the economic pain and anxiety consumers are feeling. Overall holiday spending by consumers for all categories (gifts, greeting cards, decorations, etc.) will be down 14 percent. Consumers overwhelmingly blame an increased cost of living, concerns about the economy and a plain old “don’t have the money” as three major reasons for their reasons to cutback.

But they also say their holiday budget for CE goods is 28 percent for 2008, up from 22 percent last year. And 79 percent of adults (up 4 percent) and 84 percent of teens (up 8 percent) expressed an interest in a CE gift for this holiday season.

Among the top three holiday CE gift wishes for adults in rank order are: notebook or laptop computer, TV and mobile phone. For teens the top three are computer, video game console and portable MP3/digital media player (see charts).

In this survey CEA divided product categories into eight groups (see chart). The largest category for the quarter is audio/video (which includes HDTV, camcorders and MP3 players) with 27.9 percent. The category with the biggest fourth-quarter growth rate vs. last year is GPS and in-car video with 30 percent. And mobile phones, predicted to generate 1.7 percent growth, are expected to contribute the most growth in CE during the fourth quarter.

CE accessories are the most likely to be purchased as gifts, with memory cards for digital cameras, video game accessories, carrying cases and Bluetooth headsets for cellphones among the most popular.

As for what consumers plan to give as CE gifts this holiday season, video game systems, digital cameras and portable MP3/digital media players are the top three categories. Television, with the DTV transition looming in February 2009, comes in at seventh place.

That being said, HDTV far from being forgotten by consumers. Among those expecting to buy a TV as a gift this season, 63 percent want an LCD flat panel, 45 percent want plasma and 54 percent want a 40-inch or larger display.

Reasons for the purchase include the older TV needs replacing (48 percent), “think it will make a great gift” (41 percent) and the DTV transition (28 percent) as the top three reasons.

And retailers that carry CE products should expect to see more consumers than last year. The survey shows 75 percent of those consumers surveyed said they would be very or somewhat likely to visit a retailer selling CE products this season, up 6 percent from last year. Online shipping should be up, with 54 percent saying they will buy a CE product online this season, up 3 percent from last year.

As for the next six months, consumers said they would be either cutting back or eliminating a variety of purchases, the top three being eating out at restaurants, vacations or furniture/home decor. The fourth “cut back” or “eliminate” purchase would be CE, with DVD/CD/digital downloads ranking No. 6, cellphone subscription No. 8 and cable/satellite TV subscription at No. 9.

CEA conducted its Holiday Trends survey during the height of the bad economic news of the past several weeks. Its telephone survey of 1,000 U.S. adults was conducted Sept. 25-28, while the Online Holiday Trends survey was conducted October 3-12 with the same number of participants. Each study has an overall margin for error of +/-3.2 percent.

Q4 Industry Growth Forecast

Holiday CE Gift Wish List (Adults)

Holiday CE Gift Wish List (Teens)