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Shopping Season Begins
By Suzanne Deffree -- Electronic News, 9/7/2005
Labor Day has passed. There’s a nip in the air. And snowmen are already appearing in store windows. That can only mean one thing: the beginning of a new holiday shopping season. And, according to the Consumer Electronics Association (CEA), consumers are reaping the rewards of the competitive CE industry and strong sales.
“The message from us is it’s a great time to buy,” Sean Wargo, CEA’s director of industry analysis, said.
The industry group recently reported that total factory-to-dealer sales in 2005 are projected to increase 9 percent on revenues of $123 billion. The healthy growth -- 3 percent above the CE market’s average -- is thanks to competitive pricing and overall price deflation in such markets as digital cameras, wireless communications devices and especially flat panel displays.
According to CEA numbers, the average LCD unit price will decrease from $857 in 2004 to $754 this year; the average plasma unit price is projected to decrease from $2,698 to $1,953. On that, the industry group responsible for the annual Consumer Electronics Show expects plasma and LCD unit shipments to nearly double compared to last year as consumers enjoy the lower prices. LCD unit sales are projected to reach 3.9 million units on $3 billion compared to 1.8 million units and $1.6 billion in 2004. Plasma unit shipments are projected to reach 2 million and $3.9 billion, increasing dramatically over the 2004 volumes of 870,000 units and $2.3 billion.
“All in all, it’s greater value being provided to the customer, but that, of course, takes a toll on overall revenue growth,” Wargo said of the forecast, which is down from CEA’s earlier 11 percent estimate for the year and a 1 percent slip from 2004’s growth.
“We’re still seeing healthy unit shipments of products. Each unit is just shipping for a lower price than originally expected,” he said.
Wargo further pointed to replacement and upgrade purchases as drivers of the growth. Despite digital cameras being in 49 percent of U.S. homes, consumers are purchasing higher mega-pixel models as upgrades to their original digital cameras as the technology becomes easier to use and less-expensive. CEA reported that digital camera sales totaled 18.9 million units in 2004, representing $4.7 billion in industry sales. The 2005 sales projection is 23.1 million units on an estimated $6.1 billion in sales.
The average digital camera unit price also is expected to increase from $251 to $265, whereas the flash media category is expected to experience a unit price decline. Despite the price decline, flash media is projected to produce $3.5 billion in sales in 2005 compared to $3.1 billion in 2004, the group said.
One CE area that has not seen price declines or replacement cycling is the portable MP3 market, thanks to Apple’s high profile iPod. In fact, Wargo noted that CEA revised its forecast upward for this market to 15.9 million units in 2005, compared to 7.1 million in 2004. “The good news there is it’s a higher price point -- a considerably higher price point -- than portable CD. That is providing net unit and revenue growth.” CEA further projected that for the first time MP3 players will out ship portable CD in 2005.
"The CE industry certainly is delivering on the digital promise for consumers," Wargo concluded. "Prices are competitive and digital products and innovations abound. It's a great time to be shopping for consumer electronics."
