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Holiday Retail Sales Will Be Flat, CEA Predicts

The Consumer Electronics Association (CEA) officially lowered its fourth-quarter expectations earlier this month, predicting “essentially flat” revenues and growth of only 1 percent compared with the same period last year.

That’s down from the 3.5 percent the organization originally forecast in October and repeated in November.

The group pointed to newly available data, including final October shipment and revenue data and a new survey of Black Friday shoppers, as providing reasons for its lowered expectations. The organization said the October data showed the economy and consumer sentiment “remain muted” and said its surveys “show overall spending is down this holiday season.”

“Although CEA certainly took price declines and weakness in consumer demand into consideration, the severity and the speed of declines in these unprecedented times caught everyone off guard. Consumer sentiment is improving, but shopper unease this holiday season is creating challenges for all sectors of the economy, including consumer electronics,” said Jason Oxman, CEA’s industry affairs senior VP, by way of explaining the revisions. “We are now projecting essentially flat revenue for the fourth quarter, and we continue to project overall growth for 2008. We remain vigilant in analyzing all available data to ensure that our forecasts accurately account for changes in circumstance.”

CEA’s earlier forecast was based on shipment data, consumer surveys and analysis available in early October.

CEA noted that it now expects mobile phones to see 5 percent growth in the fourth quarter compared with last year, down from the 11 percent CEA forecast in October. The group attributed the adjusted expectation to consumers holding off on upgrading handsets and “steeper than expected price declines.”

Similarly, “greater than expected discounts on laptops and an increased interest in lower-priced netbooks are impacting the computer category,” said CEA. The organization is now projecting category will decline 2 percent, down from the 1 percent decline CEA originally predicted.

As for its Black Friday survey, CEA said it found that roughly one-third of adult customers shopped between Black Friday and Cyber Monday. Consumer electronics were said to have “remained a popular choice for a majority of shoppers,” with 54 percent of consumers who shopped that weekend having purchased a CE device during that period.