While the holiday season is one that many children and families may look forward to, the same may not be true for consumer electronics retailers when it comes to the 2010 version. Some industry analysts foresee a rather tame holiday season this year in terms of sales numbers, and there are a few theories behind the predictions.
The months of October, November, and December are usually strong ones for retailers. During those months, also known as the holiday season, many retailers bring in one-third of their sales for the year. After interviewing shoppers and performing industry analysis, the NPD Group, a market research firm, predicts that the 2010 holiday season will pale in comparison to 2009. Despite several years of growth, NPD predicts that electronics retailers will see a one to three percent decline in sales this year.
In a post on its blog, the NPD Group listed a handful of reasons why many electronics retailers should be worried during the next few months. The first reason listed was the pricing levels of electronics. During holiday seasons, consumers usually expect to find electronics deals that involve drastic price cuts of 20 to 25 percent. NPD predicts that discounts during the upcoming season will hover around the five percent mark.
Such a low discount rate may not be enough to push many customers to purchase immediately. Instead, they will likely hold off and wait until prices drop further, which could be in 2011. Since pricing is usually the most important factor to many consumers, the lack of any overly-attractive deals could hurt sales numbers.
Another reason listed by NPD for the bleak 2010 outlook is the lack of innovation in new products. According to Stephen Baker, NPD's vice president of industry analysis, unit volumes of electronics were increased in the range of 30, 40, and 50 percent. Those positive numbers show that last year was an active one for consumers. If they already purchased items such as televisions, laptops, and more that have updated technology, there is no reason for them to replace and upgrade those products this year.
While the iPad can certainly be seen as innovative, it is just one specific product on its own. Despite its high sales, the iPad itself is not enough to carry the entire electronics industry through the season.
NPD's blog post also stated that sales numbers cannot grow forever. Since last year's numbers were so high, the same growth cannot be expected this year as well. Somewhat of a slowdown has to occur, and 2010 seems to be it. In essence, 2010 has to pay the price for 2009's success.
Although the 2010 holiday outlook is not a great one, the future does look bright. With newer technologies becoming more popular, such as tablet devices, 3D televisions, and more, competition among manufacturers will increase. With that will come improved features and heavy price competition, which will eventually lead to more consumers opening their wallets when the holidays roll around.
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