Re-Charging Consumer Electronics1 Dec, 2008 By: Jacqueline Renfrow Response
After a disappointing second half of the year, electronics retailers are looking to DR to reinvigorate 2009 sales.
The forecast for retail does not have too many consumer electronics (CE) stores optimistic about holiday sales. A sign of the times, major electronics distributor Circuit City declared bankruptcy in November and retailer Best Buy readjusted its annual sales forecast downward, from projections of $47 billion to $43.7-$45.5 billion in revenue.
Similarly, Sony reported that its fiscal-year earnings forecast would be off following a 72-percent drop in its second-quarter net income. Even large retail chains that are still showing positive sales figures, such as Wal-Mart and BJ's Wholesale Club, are seeing a decline in electronics, TVs, videos and videogames — which traditionally do 50 percent of their business in the holiday quarter.
While some companies are adjusting forecasts some, such as Hewlett-Packard (HP), are conducting reviews of media planning and buying divisions — in the corporate, personal systems group and image and printing group businesses. And feeling the effects, or perhaps triggering them, customers were asking about Black Friday prices the day after Halloween.
"It's clear that the consumer largely disappeared in September and all but vanished in October," says Shawn DuBravac, economist at the Consumer Electronics Association (CEA). "This sudden change has forced many to update their projections for the fourth quarter."
The year-over-year growth for fourth-quarter 2008 is projected to be off nearly 75 percent from its 12.5-percent rise in 2007, according DuBravac. Since the electronics industry was anticipating a slow quarter, a 9-percent growth rate is expected overall for 2008.
But the situation may not be as bleak as it seems. Americans still want and need computers, TVs and phones, especially if they're going to be traveling less and staying at home more in 2009. And despite the doom-and-gloom, the CE market is still expected to earn a 3.5-percent increase in the holiday-laden fourth quarter.
Consumer electronics products consistently make up four of the top 10 items on adults' gift wish lists — 80 percent of adults and 84 percent of teenagers expressed interest in receiving a consumer electronics gift this season. Which products are most popular? For adults, it is televisions, video-game systems and cell phones, while for teens it is computers, video-game consoles, portable Mp3 players and cell phones.
"There remains a robust desire for consumer electronics, and this category continues to be the bright light during these dark economic times," says Tim Herbert, CEA's senior director of market research. "CE devices have become integrated into the everyday lives of consumers. No matter what your current economic situation, you can find a CE product to fit any holiday budget."
In addition, marketing has the power to help both the large and small electronics retailers turn sales around. One of the most important aspects of selling an electronics product is being able to communicate how the product works to the customer and that's where DR steps in.