Tough Christmas Selling Season for Consumer Electronics is Forecast

The 2010 Christmas selling season for consumer electronics isn't looking so good, says Stephen Baker, NPD Group VP, at least from the retailer and manufacturer standpoint. Pricing levels continue to flatten, so average selling prices are flat.

Consumers have come to expect 20 percent to 25 percent price declines every year, so small movements of five percent or less are unlikely to inspire them to rush into the stores and buy.

The other issue is that consumers are in the midst of technology "refresh" cycles. Just half of all flat-panel TV purchases are now made by first-time buyers. And more than 80 percent of the notebook installed base was less than three years old at the time of NPD’s Household Penetration survey earlier in 2010.

With the possible exception of Apple's iPad and other new tablets, there does not seem to be some compelling new application or device to prompt a big upsurge in buying, Baker suggests.

Also, the 2010 Christmas selling season will face tough comparisons with the 2009 holiday season. In 2009, categories such as flat-panel TVs saw 25 percent sales increases, and notebooks were up twice that amount. It always is tougher to show current period growth when the comparison is to an earlier period with robust sales growth.

The exception will be the iPad and tablets, in all likelihood.

NPD’s research also indicates worsening consumer sentiment. "Consumers who were considering just cutting back on  purchases are now not planning to buy anything at all," says Baker.

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