Sales of consumer electronics increased a modest 6 percent during the critical Thanksgiving week, with the pace of growth falling by more than half.
According to The NPD Group's weekly point-of-sale (POS)data, CE racked up $2.2 billion in retail sales during the week ending on Black Friday, Nov. 23, but the 6 percent year-over-year gain was the first time dollar-sales growth dipped below double digits in the six years NPD has tracked such data, possibly presaging a slowdown in holiday sales. CE revenue grew 12 percent during the comparable week in 2006, and 15 percent in 2005.
"Given the position of many of the largest categories on the growth curve, it was inevitable that overall volume growth rates would decline," said Stephen Baker, NPD's industry analysis VP. "Despite the relatively poor overall results, we remain optimistic about the holidays."
Indeed, despite the pullback, retailers might still enjoy a more profitable season than last year due to the more restrained promotional picture. The change was reflected in the week's 9 percent spike in unit sales, which far exceeded the 6 percent gain in dollar volume.
"While revenue growth declined this year, we're at least seeing a more rational pricing environment than last year, as well as a more stable competitive outlook," Baker said. "This is most certainly a positive harbinger of expected profitability throughout the holiday season, even if it calls growth prospects into some doubt. A continuation of the more benign pricing environment noted on Black Friday should make for a reasonable, but not spectacular, holiday selling season."
On the product front, GPS systems enjoyed the biggest growth, with sales up 237 percent to more than $100 million, making it the sixth-largest category on a dollar-sales basis, NPD said. "When looking for the best performing category of 2007, don't look any further than GPS," Baker observed, noting that more GPS devices were sold this year than PCs, 30-inch-and-larger LCD and plasma TVs. "While sales volumes were strong last year, it was more of an introduction for the category than it was the establishment of a long-term opportunity. Sales this year appear to cement GPS as a long-term major player."
Steep price reductions likely contributed to demand, with the average selling price (ASP) of GPS units falling to $189 during Thanksgiving week from $322 last year.
The next biggest sales gainers for the week were:
- digital frames (ASP $67), up 171 percent;
- LCD TVs (ASP $642), up 79 percent;
- camera accessories (ASP $25), up 44 percent;
- d-SLR cameras (ASP $655), up 33 percent.
Besides camera accessories, all manner of add-on sales including notebook computer bags, remote controls, digital cables and computer memory performed well, NPD said, suggesting retailer success at implementing a "basket of goods" merchandising strategy. These high-margin adjunct sales could help compensate for what NPD described as "sharp declines" in the growth rate for plasma TVs, digital cameras and MP3 players this year.
On Black Friday proper, LCD TVs led the pack with a 45 percent increase in unit volume and an 80 percent gain in revenue, driven largely by the enormous change in product mix since 2006. This year panels 30 inches and larger outsold the smaller sizes, which led to triple-digit hikes in unit and dollar volume among the larger-sized TVs, amid a modest 14 percent decline in ASPs.
Notebook computers also drove some increases, with unit volume up nearly 30 percent and dollar volume up almost 17 percent. What's more, ASPs declined by less than 10 percent this year, compared with 18 percent on Black Friday 2006.
Digital picture frames also enjoyed a break-out performance on Black Friday, with retailers selling nearly 500,000 units and raking in some $30 million.
During a Black Friday Webinar by DisplaySearch that followed the release of NPD's POS data, Baker stressed that bundling high-margin accessories and services, and updating stores to sell them, will become increasingly important for retailers as TV growth rates slow, and no replacement category is in sight.