Consumerscope: Holiday Season Looks Good for CE Sales

Consumer electronics tops many wish lists

As 2012 comes to a close and we start wondering what 2013 will bring, many eyes are on the holiday shopping season and what it might mean for our industry.
Indeed, holiday sales often ‘make or break’ a retailer’s bottom line. We know the upcoming holiday is especially important for the consumer electronics (CE) industry, given the popularity of CE as gifts.

Think of the potential sale volume for a minute: CEA research finds more than four in five (85 percent) U.S. adults plan to purchase gifts during this holiday season.

With a total U.S. adult population of 240 million, some 204 million U.S. adults expect to buy gifts this year.

CE is a popular gift item (for both givers and recipients) for almost every occasion. CEA’s recent 19th Annual CE Holiday Purchase Patterns study finds three in four gift givers intend to buy a CE product this holiday season. The trend has been consistent over the past five years as well. The top recipient for CE gifts will be children, as almost half of U.S adult gift givers (45 percent) plan to give a CE gadget this holiday season. But don’t overlook the fact that many shoppers who enter stores are shopping for themselves. CEA’s research finds one in three consumers plan to purchase CE for themselves or their spouse or significant other.

We know CE is popular for holiday gifts, but perhaps the bigger question is how CE gifts will translate to revenue for the industry. Considering the importance of the holiday season for the industry, it should be no surprise consumer purchase intent and sentiment about the overall economy is closely watched as an indicator of how sales will impact the industry.

CEA finds consumers are a bit more optimistic this holiday season compared to last year in terms of their spending sentiment. This year, in fact, two in three consumers say they plan to spend the same (47 percent) or more (19 percent) compared to last year. As a result, CEA finds overall holiday spending is expected to be up 11 percent from 2011 with the average consumer spending $1,634. On average, half of the holiday budget (approximately $842) will be devoted to gifts and 30 percent of the expected gift giving budget—approximately $252—is earmarked for CE gifts.
With so many CE products to choose from (and at a host of price points), what CE gifts do consumers want most this holiday season? Put another way, what product categories will see strong sales? CEA’s holiday research finds the top CE products most frequently requested by adults include tablets, televisions, smartphones, notebook computers, game consoles, e-readers and MP3 players. Look for these product categories to move quickly off the shelves, but don’t forget the corresponding accessories that go with these products, as they will likely enjoy strong sales as well.
Knowing millions of American adults plan to purchase holiday gifts is important information for a variety of reasons. But just as important for the CE industry is understanding how consumers plan to shop for gifts, when they begin shopping, where they look for deals and promotions, and where they will ultimately make their gift purchases. Indeed, knowing when the crowds will enter the door is critical for promotional and marketing efforts, as well as inventory control and staff planning.
CEA research finds two in three consumers report beginning their holiday shopping in November or December. Even though many retailers have begun pushing Black Friday-like deals earlier, November continues to be the most popular month for consumers to start holiday shopping. (One in four consumers report they begin shopping between Thanksgiving and the end of November.) In addition, eight in ten consumers believe the holiday shopping deals and Thanksgiving weekend deals will be either as good or better than last year. Clearly, consumers expect to find deals when they enter the stores this November, and as such, promotions and sales are likely to be well received.
One question that arises regularly is the role brick-and-mortar plays in holiday shopping. With all the talk about “showrooming,” CEA research finds there is little evidence to support a significant shift in shopping behaviors this holiday season. CEA finds seven in 10 consumers expect to visit brick-and-mortar stores for hands-on experience with CE products. In addition, while most CE givers say they plan to see CE products in person, a sizable percentage of consumers not planning to give CE will nevertheless view these products in person (39 percent), and thus a potential opportunity for unanticipated CE purchases will arise. CEA also finds that in-store shopping patterns affirm that showrooming, as a percentage of shoppers, remains in the single digits.
Finally, CEA finds that pricing remains the most important criteria when deciding where to shop for CE gifts this holiday season. Beyond price, ease of purchase, return policy and past experience with a retailer are all equally important factors.
The continued importance of price will also influence how consumers find the best deals. Two-thirds of U.S. adults (66 percent) will compare prices for electronics products online before making a purchase, 41 percent will use a mobile device to compare prices while they are in a store, and 28 percent will search for promotions on social networking sites.
Given this, retailers should view holiday shoppers as potential in-store buyers, and push in-store promotions and sales. Shoppers are expecting deals in late November and in December when they will be in the stores. DS

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