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What to Expect for Holiday CE Sales; Consumers expected to give more electronics as gifts to more people

26% of potential TV buyers will or may pull the trigger on a 3DTV /

Every year the CE sales cycle reaches a boiling point on Black Friday and simmers through the New Year. That cycle reflects the overall state of the industry, as well as its impact on dealers and consumers. This holiday season will be a decisive statement on the health of 2010’s economy, while also serving as a harbinger for what we might expect in 2011.

There is cause for cautious optimism. According to CEA’s 17th Annual CE Holiday Sales and Forecast study, total holiday spending by U.S. adults is expected to be $1,142, up 3% from 2009’s $1,365; reversing two consecutive years of decline.

Still, consumer concerns about the economy remain and more people say unemployment is a reason to spend less this holiday season. The “new normal” consumers have adopted is felt by manufacturers and retailers, who struggle to work within the new parameters of value.

There is evidence, though, that the mood of consumers is improving, which will translate to holiday sales. The percentage of consumers planning to spend money on gifts is 73%, up 6% from 2009. We see an incremental increase on intended gift spending, with 21% of consumers planning to spend more than they did last year. The uptick will have a more dramatic impact on CE sales: We can expect a 5% increase of consumers spending on CE gifts. When we look at trends surrounding the intended recipients of those gifts, we see that CE gifting is higher than in 2009: 37% of gift spending is targeted for spouses/significant others (up 10% from last year), and gifts for children and oneself are up 1% and 5%, respectively.

From a CE gift perspective, we can expect the usual suspects to garner the most attention this season. Video game consoles, MP3/portable media players and notebooks are the top three expected CE gifts. Among adults, notebooks, iPads and eReaders are the top three CE items on wish lists. Portable MP3/digital media players, iPod/iPod Touch and video game consoles rank highest on teens’ lists.

With continued price pressure driving down ticket-rings at the registers and competition heating up on the shelves, it should be another season of healthy TV sales. Among consumers planning to buy a TV as a gift, LCD continues to dominate, with 73% considering this technology. Perhaps the most intriguing—and anticipated—story will be the success of 3DTV. The study reveals 26% of potential TV buyers will or may pull the trigger on a 3DTV. The performance of 3DTV sales this holiday season will reflect overall consumer sentiment and will lay the groundwork of what the industry can expect going forward.

With the phenomenal growth of eReaders and iPads in 2010, we can expect a remarkable showing from these products during the holidays. The strong sales of these categories raises the question of how their success will impact the sales of other computing solutions. Only a year ago, netbooks seemed to occupy the coveted sweet spot, providing a platform that was portable and lightweight, but sufficiently robust as an affordable standalone computing solution. With the infiltration of iPads and early price drops of eReaders, it will be instructive to watch how netbooks fare as gifts this holiday. That story will certainly continue into 2011.

More consumers will be shopping at mass merchants (66%) this year, ahead of electronics stores (60%) and warehouse clubs (40%). Increasingly, consumers are able to shop without leaving their homes, with 46% likely to buy CE products online. The criteria for CE gift shopping revolve around pricing and policy: 84% of consumers rank product pricing as the most important criteria, closely followed by store return policy (81%). Consumers seem more willing to shop at discount retailers (45%) or buy a less expensive version of a product (42%), while the largest segment of consumers are spending more time looking for good deals (69%). Consumers are also taking a “wait and save” approach, with only 17% beginning to shop in September or earlier. With Black Friday still the most hyped shopping event of the season, it follows that November will be the biggest month (32%), followed by December (27%).

No matter what state the economy is in, dealers can count on certain immutable circumstances. Consumers are always keen to find the best deals, and with the ubiquity of online access, bargain hunting is a 24/7 proposition. Maturing products will inevitably make way for new offerings, unless price points are sufficiently enticing for replacement or gifting options. Finally, the consumers have spoken and the demand seems strong: the pressure is now on the industry to convert these shoppers into satisfied customers and edge our industry toward increased and sustained success.

Sean Murphy, CEA

original post: http://www.dealerscope.com/article/cea-consumers-expected-give-more-electronics-gifts-more-people

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