woman holding presents

Consumer electronics market set to bounce back

Christmas shoppers are eyeing up the latest gadgets. E&T finds out about a consumer resurgence.

US Christmas holiday spending is set for a modest rebound but electronics will take a disproportionately large share, according to the latest data from the Consumer Electronics Association (CEA).

Total holiday-related spending is expected to reach $1,412 (£888) per person, 3 per cent ahead of the 2009 number ($1,365) although still a good way below the pre-recession spend of $1,671 in 2007, say CEA analysts Steve Koenig and Shawn DuBravac. Within the overall figure, gifts account for $750.

The good news for the association is that its sector's numbers are recovering more robustly than those for the broader economy. In 2010, 31 per cent of the customers CEA surveyed say that they plan to give consumer electronics presents, against 22 per cent in 2007, and they will spend more on them than ever. 'So we see the holidays shaping up nicely,' DuBravac says.

The CEA released this latest snapshot of the market at its New York preview of the 2011 Consumer Electronics Show (CES, 6-9 January) in Las Vegas.

The data shows the return to growth is led by a number of familiar products such as Apple's iPad and e-readers such as the Amazon Kindle (see p22). However, the laptop/notebook category tops the CE wish-list for the third year running.

Furthermore, there are other trends running in the market's favour. One is the collapsing divide between consumer electronics ('brown goods') and domestic appliances ('white goods'), a shift already reflected in changing store layouts at US retailers (see E&T Vol 5 #16 ' 'View from Washington'). This year's CES will feature white-goods stalwarts such as GE for the first time, promoting networked home appliances.

The market is bolstered by retailer bundling. These packages might combine two displays with a Blu-ray player or offer a games console alongside several titles and peripherals.

US retailers are also fixing bargain event days - named after the 'Black Friday' discounts that come a day after November's Thanksgiving public holiday - earlier and earlier in the year.

The Monday-after-Thanksgiving has become a dedicated technology offers day, Cyber Monday. The CEA said that the increasing trend towards online consumer electronics purchases has meant that buyers from across the globe are logging on to US sites to check out these special prices.

Despite the CEA's bullishness, retailers remain cautious. Wal-Mart, the world's largest, is offering free shipping on online purchases, and now Best Buy, the US's largest CE specialist, has announced that it will follow suit. Even so, Best Buy CEO Brian Dunn believes wary shoppers will delay purchases to the last minute.

With CES, the world's biggest electronics show, on the horizon, Koenig and DuBravac picked out four trends for next year that they expect to see highlighted.

'Portability vs. Pocketability' reflects the growth in tablet computing and e-readers, an emerging space for mobile devices that might not fit in your pocket, but which have relatively small and previously unexplored form factors. The Kindle with its 6in (15cm) screen is a good illustration.

'Pushing Past the Primary Purpose' refers to consumers' demands that products contain a wide range of readily-installed functions. The basic offerings in a smartphone would be one example of this, but so would the incorporation of Internet connectivity and services such as streaming audio and video on an increasing number of TVs.

'From Amplification to Applification' extends the preceding idea, highlighting the need for products to have a wide-range of optional 'apps' available to further enhance their capability. The iPhone App Store is the poster child but the trend is also now being seen in TVs and electric guitars (see p32).

Finally, 'Miniaturisation and Sensorisation' picks up on the provision of location-based and related services that allow users to refine the personal response they get from devices as Moore's Law enables the integration of sophisticated sensor technology in smaller products.

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