Season looks bright for consumer electronics

Sales, led by increasingly affordable flat-panel TVs, are expected to be strong.

Retailers wishing for booming holiday sales shouldn't be disappointed this year.

Forecasts indicate U.S. consumers will be opening their wallets early and often this season, shelling out $21.7 billion on consumer electronics gifts, according to the Consumer Electronics Association (CEA). That's a 27.6 percent jump from last year's total of $17 billion. Consumer electronics sellers should be especially thankful, as those gifts will likely account for a quarter of holiday spending this year, the CEA said.

"Nobody's shooting themselves in the foot this year. There's plenty of product out there."
--Stephen Baker, NPD Group vice president of industry analysis

Though stores will be open early with the best bargains, it looks like you won't have to elbow other shoppers out of the way for any electronics items this year, with the exception of next-generation gaming consoles like the Microsoft Xbox 360, Sony PlayStation 3 and Nintendo Wii. Otherwise, consumer electronics retailers are well-stocked entering the holiday shopping season, according to Stephen Baker, vice president of industry analysis for the NPD Group.

"Nobody's shooting themselves in the foot this year," he said. "There's plenty of product out there."

That product includes everything from massive televisions to miniscule handheld global positioning system devices, all of which consumers are expected to snap up come November 24, or "Black Friday," through Christmas.

Analysts anticipate flat-panel TVs will lead all consumer electronics sales this holiday season, aided by some bargain Black Friday prices. More high-definition content than ever is available to watch on those wider, thinner screens, and steadily declining prices have made LCD, plasma, microdisplay and direct-view HD sets increasingly affordable.

The prices of flat panels "are right in the sweet spot of what people are looking for," said Baker. "For the first time, they're going to be available to more than just a couple people."

Unit sales of HDTVs are up 52 percent between January and September this year, compared with the same period in 2005, according to the NPD Group. The average price of TVs is also down 8 percent since last year, indicating that consumers and retailers both should go home happy in the coming weeks.

Several retailers are trying to move notebook computers off their shelves. Wal-Mart has been advertising a Compaq laptop for $398, and Staples is countering with a $399 Compaq laptop with a rebate for a free HP inkjet printer. But the ad that will raise the most eyebrows is undoubtedly the Compaq from Circuit City for $99 with a one-year Vonage subscription.

Digital audio players should top the holiday wish lists of adults and teens, the CEA said at its annual conference in October. Sales of MP3 players of all the major brands should be strong, including the most high-profile newcomer, Microsoft's Zune, according to Baker. While nobody camped out to be the first in line to buy one, he predicts sales of the Wi-Fi-enabled music player will pick up in the next month.

"Whether (the Zune) sells in the millions of units, this is the best season for those kinds of products. They'll do OK." But, he added, "clearly, the iPod will be the winner."

Digital cameras will be a popular gift this year, too. Not just low-end cameras, but pricey single-lens reflex (SLR) cameras as well. Thirty-seven percent of adult respondents to the CEA's annual holiday spending survey said they planned to give a digital camera as a gift this year.

That makes sense, Baker said, because of the way the camera market has shifted recently. Used to be, a family had one gadget for snapping photos; now they're cheap enough for each member to have one. New features will help sales, too.

"Anti-shake technology has, I think, broadened the demand for upgrades as well. While there are still individuals that would like (their first) digital camera, we're seeing people trading up for the third or fourth time," Baker said.

Online sales to continue to grow
There's always the option of never leaving the house to shop, which consumers are doing more often. Online shopping will continue to grow, with holiday sales jumping to $32 billion this year, an expected 18 percent increase over 2005 sales, according to a survey by Jupiter Research. An showed that 80 percent of Americans with Internet access will make an online gift purchase this year.

For one month, online retail giant is letting customers vote on one product each week that they want for an extremely low price. Voting began last week. Beginning on Thanksgiving Day, Amazon will sell the Xbox 360, which normally costs $400, for $100.

"We took that door-buster strategy and put an Amazonian twist on it," said Craig Berman, an Amazon spokesman. "We wanted to make these deals 'ridiculous,' but we could only do that on one item and we created an empowerment function for customers to vote for and help choose which item would be offered at that 'ridiculous' price."

Shoppers are also procrastinating more than ever, leaving their collective gift-giving fates in the hands of the U.S. Post Office and shipping companies, according to Jupiter Research. In 2005, retailers' Web sites experienced a 13 percent increase in visitors between December 15 and 31, compared with last year. A recent Jupiter study found that more than a third of online buyers will still make Web purchases this year even after the ground-shipping dates guaranteeing packages to arrive by Christmas have passed. That's either dangerous or smart--retailers often slash prices even further as the clock ticks down to December 25.

As far as what to expect in terms of sales, Berman said Amazon is anticipating "its best holiday season yet." Of course, he chuckled, "We said the same thing last year, and the year before that, and the year before that."

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