Holidays 'uncertain' after poor back-to-school sales

The end-of-summer period is typically a boon for consumer electronics retailers, but this year, it doesn't deliver big revenue growth. Will the holiday shopping season help them catch up?

The roughly two-month shopping period before school starts is typically fruitful for consumer electronics retailers. Not this year.

All categories combined showed minimal growth. Although notebook sales increased 10 percent over the same period the year before, desktops were down 3 percent. And products that have been guaranteed big sellers in past years continue to lose momentum: digital-camera sales were down 1 percent, printer sales were even, and MP3 player sales were up 7 percent.

HP Mini-Note netbook
Will Netbooks give electronics retailers the bump they need this holiday shopping season? Hewlett-Packard

This is especially concerning to electronics retailers, since the all-important holiday shopping season is approaching, a time when they typically can expect to play catch-up in yearly sales and revenue.

"The holiday (period) is likely to look a lot like back-to-school, I think," said Steve Baker, vice president of industry analysis for NPD Group, which tracks electronics retailing. There's likely to be "a little bit better demand" because there are a broader array of categories that people shop for during the holiday. For back-to-school, retailers push mostly computers and peripherals.

The problem with notebooks: they've been selling so well for so long that the category just can't sustain that kind of growth forever. Growth percentages in years past for laptops during the back-to-school shopping period have been in the high teens and low 20s, which is why 10 percent growth this year is disappointing for retailers.

And when a market matures, steep price declines are harder for retailers to offer . Notebooks from brand names have been routinely available for less than $600 for a while, and retailers are finding it harder to cut prices and maintain acceptable profit margins. The same could be true for Black Friday and beyond, when retailers usually unveil their best deals of the year.

Of course, back-to-school shopping isn't a perfect indicator for holiday shopping, especially when it comes to an important category like notebooks. Portable PCs will become even harder to predict this year because of the so-called wild card that Netbooks present. Every major PC maker has one now, but they haven't been available in large volumes. This will change in the next few weeks, and it will be interesting to see if mainstream consumers find a use for them.

New product categories, combined with disturbing financial news, makes it harder for electronics retailers to feel comfortable heading into the holiday season.

"The word everyone (in electronics retail) uses when I talk to them is 'uncertainty,'" Baker said. "People can handle, 'We're sure it's going to be bad,' or, 'We're sure it's going to be good.' But 'We're not sure what it's going to be' is tough to plan against."

About the author

Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica.

 

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