“Despite some downside risks, the consumer is employed, healthy, growing and spending.”
That was the assessment offered at the CEA’s Industry Forum, held Oct. 14 to 17 at San Diego’s Hotel Del Coronado by the group’s director of research, Joe Bates, as he presented results of the CES sponsor organization’s 14 th Annual Holiday Sales Survey of about 1,000 U.S. consumers. The data, culled last month in phone interviews that were designed to discover respondents’ consumer electronics purchase intentions for holiday gift-giving, projected a seven percent growth in sales of CE during the October-to-December period – down from last year’s projected 15 percent uptick over 2005, but still a positive result, said Bates, when measured against a raft of market influences – not the least of which he characterized as “the elephant in the room – the slow housing market.” The group also separately polled about 500 teens for its 4th Annual Youth Survey.
Other stresses on the statistical percentages, he added, include a slowing job market – three million jobs were added to the work force in 2006 but only 1.3 million in 2007 – and pricing pressures affecting wholesale market growth, which was up 12 and 17 percent, respectively, in 2005 and 2006 but has slowed to just five percent in 2007. However, he said, the figures when viewed in aggregate indicate that “the consumer remains healthy and income growth is solid. There is a solid base for growth in consumer spending,” particularly for CE items, as buyers reallocate spending “away from things like dishwashers and toward buying technology. The customer is in a good mindset for the holiday shopping season.”
What it is in the “wants” portfolio that respondents long for the most this year, however, has shifted. Among adult respondents, in “wants,” computers moved to the #1 spot, up from the #4 position in 2006. Numbers 2, 3 and 4 on the “wants” roster are “peace and happiness” and “big-screen TV” – which jumped from #11 in 2006, and “clothes,” down from the #1 spot last year.
Drilling down to CE products that adults want in 2007, the survey lists portable MP3 players, notebook/laptop PCs and video game systems in the 1, 2 and 3 spots. HDTV, specifically, moved to the #7 spot from #10 in 2006; however, “TVs (any type)” dropped off the radar entirely on the “Top 10 Planned CE Gifts” list; the category was ranked #8 last year. Notable additions to the Top 10 are: portable gaming devices, video game peripherals and notebook/laptop PCs. In the #1 spot this year, usurping 2006’s “digital cameras,” is “video game systems.”
In the “hot gifts” categories – that is, groupings that respondents said they were likely to buy in Q4, teens surveyed were very keen on video game systems (39 percent), portable MP3 players (38 percent) and digital cameras (44 percent).
Bates and his research cohort, Shawn DuBravac, the CEA’s CFA and economist, were optimistic that niche categories like GPS navigation systems and digital photo frames would fare well, with DuBravac adding that “the desire for consumers to connect with each other, and for direct connections to user content” would continue to bode well for the mobile phone category – as would the expected positive affect of the iPhone market introduction this year.
Bates also expounded on the two biggest news-getting CE categories of 2007 – high-definition HD DVD and Blu-ray players and flat-panel TVs. He said it was “way too early to tell” which of the two disc formats would win out – or indeed, if one or the other would prevail, citing consumers’ general satisfaction with standard-definition DVD and their confusion about the difference between hi-def and standard upconverting DVD players. He opined that “prices could actually hold their own in the TV market this year. Last year, there was a supply glut. But you’re not likely to see the same bloodbath decreases this year versus last. It will be a solid fourth quarter overall.”
