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Electronics may jump-start holidays

Computers and consumer electronics sales rise at retail stores during Thanksgiving week, which bodes well for the holiday shopping season, according to The NPD Group.

Retailers of computers and electronics equipment enjoyed the benefits of a bigger shopping spree over Thanksgiving week compared with last year, according to a new report.

Revenue from computers and other electronics equipment totaled $631 million in the United States during the week of Thanksgiving, which includes Black Friday, the traditional opening day of the frenzied holiday season, according to the report, released late Monday by The NPD Group, which tracks U.S. electronics sales.

The data confirms earlier reports that sales had increased.

The day after Thanksgiving, Black Friday, and the weekend following it often set the tone for holiday purchases. Overall, sales increased by 11 percent, with the $631 million figure topping last year's $568 million, the report said.

Black Friday once represented the single largest day of sales, but it is now considered more of a trendsetter. The weekend before Christmas now attracts the most sales, as people wait for last-minute deals, according to the company.

According to NPD Group, Thanksgiving week sales jumped 11 percent year over year in 2003, falling short of the increase recorded last year, when sales rose 17 percent to total $568 million.

"I don't think anyone's really going to complain. And don't forget a lot of that week's sales are not just affected by what people want to buy; they're affected by promotions," said Steve Baker, an analyst at NPD Group.

The ups and downs
Some of the best-selling items were DVD burners, digital cameras and data storage devices, such as Universal Serial Bus keys, all of which were prominently featured in sales fliers and Friday morning promotions. Notebook PCs also saw strong increases, but sales of desktops declined slightly, the NPD Group report said.

DVD burner unit sales leaped 527 percent year over year, while digital camera unit sales increased 55 percent. Wireless networking hardware, another standout, saw unit sales grow 140 percent from last year, the report said.

Printers and flat-panel displays did not fare as well, however, mainly due to shortages of liquid crystal display (LCD) panels and already aggressive prices on items such as all-in-one printers, both of which caused retailers to focus promotions on other items, Baker said.

"More than the sales trend, I think if you look at the products, (the report) says what's hot is storage (and) imaging products," Baker said. "I think it also says that while everyone is looking to be aggressive on price, they can't be so everywhere because of product constraints or because of the history of the category."

LCD shortages have kept prices on flat panels, especially 15-inch models, relatively high. Special deals, such as 15-inch flat panels for $199, seen often in 2002, were scarce this year. Flat-panel sales increased 12 percent, while the average selling price for a panel increased by $25 to $443, according to NPD Group. The price increase is no surprise, due to lower levels of promotion and tighter supplies of LCD panels, Baker said.

Meanwhile, many retailers likely decided to emphasize other products instead of inkjet and all-in-one printers, many of which are already priced below $100. As a result, multifunction or all-in-one printer unit sales grew only 17 percent, while inkjets were down 18 percent year over year, the report said.

"It's hard to make an argument that you'd have gotten a lot of people flocking into your store, because they saw another $59 multifunction printer" advertised in your promotional flier, Baker said.

Mixed results for PCs
PC sales followed sales patterns generally seen throughout the year, with notebook sales increasing by double digits and with desktops bumping along with nearly flat sales. Retailers did less to promote desktops and notebooks compared with other products, the NPD Group said.

Notebook unit sales increased 35 percent, with revenue passing the $100 million mark. Desktop PC unit sales, on the other hand, shrank by 1.3 percent, the firm said.

Overall, notebooks accounted for a healthy portion of all computer sales during Thanksgiving week, according to the report, with three notebook units sold for every four desktops sold.

Some categories that did not fare well during the Thanksgiving week were cathode ray tube monitors, now being replaced by flat-panel displays, and CD burners, which are also being displaced by DVD burners. The two categories saw unit sales decline by 36 percent and 23 percent, respectively. Personal digital assistant sales also dipped by 3 percent, the report said.

Because Thanksgiving week is important in predicting future holiday sales, it's possible that retailers may shift the way they market some products.

"But the bottom line is (that this year's Thanksgiving week) reinforces all the trends we've been seeing. Sales volumes were pretty healthy, and people were willing to buy--even if they were only willing to buy certain things," Baker said.

Ultimately, "if you want to see bad, you can see bad. If you want to see good, you can see good. Looking at the good side, an 11 percent increase is great," he said. "People are out spending money...on things that have long-term value to them and to the market. Items like cameras are not one-time buys. They generate a stream of revenue (in the future) in things like paper."