2012: Looking Back, Looking Ahead

Towards the end of 2012, despite signs of good news, Vance Pflanz, CEO of Pflanz Electronics, was leery.

The retailer witnessed July to October sales rise, year-over-year, for the first time in years. Pflanz, based in Sioux City, Iowa, was selling more high-end equipment, including floor speakers, $1,000 receivers and even a few higher-end $50,000 to $100,00 home theater system installs. For years, Pflanz says, customers weren’t even interested in looking at home theater systems, but in 2012 Pflanz sold a few of Sony’s $25,000 Ultra HD projectors and a fair amount of other high-end gear.

Pflanz wasn’t alone in seeing the turnaround, no matter how small it may have been for some. CEA reported that October consumer confidence was the highest it had been since the recession began. The number of U.S. housing markets experiencing six months of gains in housing permits, employment and housing prices grew steadily, according to the National Association of Home Builders. In Pflanz’s area, the expectation of 1,500 new construction jobs, spurred by a $1.6 billion expansion at a local fertilizer plant, gave customers the confidence to remodel their homes and to build new ones. Still, Pflanz didn’t fully trust the trends.
“I’m pretty optimistic,” he says, “but in the past, things would start to get a little better, and then it would collapse.”
At press time, possibilities of more collapses lurked. The U.S. had cleared the presidential elections, but New York and New Jersey coast lines were recovering from Hurricane Sandy, Congress was posturing on the edge of the fiscal cliff, and international politics and finance were as complicated as ever.
Dogged by rolling waves of uncertainty, the U.S. consumer can’t catch a break. “That’s part of the reason why we can’t just get anywhere,” says Shawn DuBravac, CEA’s chief economist and director of research. “We haven’t really had a real recovery.”
CEA forecasts that 2012 CE factory sales were on track to total about six percent over last year. That’s down slightly from an eight percent industry increase in 2011, and the growth is skewed. Excluding smartphones and tablets, 2012 CE factory sales revenues are expected to drop five percent.
“The good news” of 2012 “isn’t filtering out to a broad base of the CE business,” says Stephen Baker, The NPD Group’s vice president of industry analysis.
Baker forecasts that U.S. retail CE revenues will be flat to negative five percent in 2012, despite anticipated fourth-quarter sales of new products such as the iPhone5, iPad mini, Microsoft’s Windows 8 and Surface tablets, the Windows 8 Phone, and Nintendo Wii U console. “It’s hard, even some of these great products, to overcome three quarters of pretty relentlessly negatives results.”

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