Electronics May Be Holiday Bright Spot

electronicsWhile consumers may rein in their spending during the upcoming holiday season, a study from the Consumer Electronics Association (CEA) reports that after peace and happiness, computers landed in third place on the Top 10 wish list for adults. Overall, electronic gifts accounted for four of the top 10 slots, leading the trade association to predict that it will see a 3.5% increase for electronics this quarter.

For adults, TVs, video game systems and cell phones also made the top 10. And for the 84% of teens who hope to get a gadget (an 8% increase from last year), computers, video game consoles, portable mp3 players and cell phones top the list. The CEA survey reports that consumers plan to spend a total of $1,437--significantly higher than other national surveys. That still represents a $200 dip from its poll last year. Despite the decline, it finds that consumers plan to spend more on electronics, with 28% of total spending earmarked for such gifts. (That's up 6% from last year.)



"Certainly with the recession in the early 1990s and the burst of the dot-com bubble, consumers spent less of their discretionary income on consumer electronics," the trade organization says in its release. "However, there has been a change in sentiment as consumers now view [electronics] as a necessity rather than a luxury. Although this year's projected fourth-quarter growth is down from last year, discretionary spending on consumer electronics is at an all-time high."

One change, it says, is that shoppers say they will spend significantly more time this holiday looking for bargains, including using coupons. And four in 10 intend to put electronics gifts on their credit cards.

Electronics retailers certainly hope the CEA is right. Minneapolis-based Best Buy has forecast a same-store sales gain of between 1% and 3% for the rest of its fiscal year. And the beleaguered Circuit City, based in Richmond, Va.--which installed a new CEO last month after posting an adjusted loss of $163 million--withdrew its financial forecasts.

And RadioShack Corp.--which just posted a 6.4% gain in sales for the third quarter to $1.02 billion, with operating income rising 9.8% to $84.8 million--also sees a rough road ahead. Despite same-store sales gains of 8% at company-owned stores, 5.9% at dealer/franchise stores, and 45.2% in its online division, it is also seeing a slowdown. "After strong months in July and August, our sales and earnings trends slowed in September," it says in its release. "We anticipate that this challenging retail environment will continue."

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