Consumer Electronics Holiday Forecast: Rough Roads or Smooth Sailing Ahead?

With the current economic slump, this holiday season is expected to be a tough one for most retail sectors, but will consumer electronics be one of them?

Maybe not. A recent study by the Consumer Electronics Association found that although consumers may be spending less overall this season, they are planning to spend more on CE gifts. Some even argue that that the weak economy will make home entertainment products, like video games, even more popular this year

What can the trends in consumer electronics shopping online tell us about what’s to come for the rest of 2008?

  • There are fairly predictable traffic fluctuations during the holiday season: a consistent November climb, December peak, and January drop in interest.
  • Traffic trends to these sites since April have been flat, and fell faster after the 2007 holiday season than in previous years.
  • Over the past three years, the greatest month-to-month traffic increases happened between October and November; a 30% increase in 2007, a nearly 16% increase in 2006, and a 21% increase in 2005.

While this data does not include consumer electronics interest at big box retailers (i.e.,Target and Wal-Mart), or review sites that consumers may use for research before buying products in a bricks and mortar store (i.e., CNet), it still may prompt some important questions for CE manufacturers and retailers this holiday season:

  • If online interest declines this year, does that automatically mean less potential for CE sales? Will the people who do visit these sites be the ones who are increasing their CE spending this year?
  • If online interest stagnates this holiday season, is it the result of the economy, or has the number of online CE shoppers just leveled off since 2005?
  • If online interest does decline, will it be across the board for all products, or will demand become product specific?
  • Will we see a more dramatic increase in online interest from October to November in 2008 as we did in 2007?

We won’t know how this holiday season will play out early next year. But until then, we’ll be watching to see how the market for consumer electronics shapes up for the rest of 2008.

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