Holiday Forecast
October 16, 2012, CEA Industry Forum, San Francisco—Shawn DuBravac and Steve Koenig from the CEA presented the organization’s take on the coming holiday season. Because consumer spending drives the holiday season, and technology is of increasing importance to consumers, the study looked at the conjunction of these two trends. The economists described their methodology, which included surveys of adults and teens, to determine whether consumer spending will mirror improvements in the economy.
Compared to last year, two thirds of consumers plan to spend the same or more this holiday season. About half of these people plan to spend about the same amount as they spent last year, an additional findings point to spending improving in several key areas. Overall spending is expected to be up 11 percent from last year, averaging $1634. Half of the money will be devoted to gifts, an increase of 9 percent.
Three out of four people plan to buy a consumer electronics product, and top recipients will be children. One third of consumers who purchase some CE devices for themselves or their significant other, and one in five plan to purchase these devices for their parents. Those people who plan to spend less this year are concerned about economy, even though fewer people cite the economy as an issue this year than last year.
The top mentioned product this year is a tablet computer, followed by TVs and phones. Women outnumber men in requesting a tablet, and half of the people who want HDTV are between the ages of 25 and 44. Accessories are likely to be popular this year, one third of the adults surveyed are considering headphones or earbuds and carrying cases. Additional memory cards and video game accessories also rank high.
In a bow to convenience and personalization, over three quarters of adults plan to give gift cards. Of these, half will be for mass merchants, 45 percent for restaurants, and 40 percent for department stores. In addition, because of the emphasis on CE devices, one quarter of consumers plan to give gift cards for online content purchases. The move towards digital content will tend to affect physical content sales this year, so expect to see fewer DVDs and Blu-Ray discs are physical books being given as presents.
Most consumers wait until November to start their holiday shopping, and over one quarter will start their shopping after Thanksgiving. Most consumers think that these times provide better deals than other times of the year. Almost half of consumers will check out online advertisements, and over one quarter will obtain information from social media sites, and another quarter on deal of the day or flash sell sites.
Most consumers will still check out items at brick-and-mortar stores, and then buy them online. Two thirds of the adults in the survey plan to compare prices for products online before making a purchase. 41 percent will use a mobile device to compare prices while there is a store.
In addition to the main study, they also worked with the AARP to look at differences in spending plans for people over 50. In general, the group mirrors the overall population and spending plans and categories of purchases. The main difference is in this group’s sources for information, emphasizing print media and TV over online. Older shoppers also start their buying before Thanksgiving.
Five main trends for this season’s spending will include an improvement in consumer health based on an improving economy. Second, despite that overall improvement, there is a significant amount of economic uncertainty based on global impacts and the likelihood of big weather events. Third, tablets and mobile devices will continue to grow compared to most other categories that seem to be saturated. The desired prices for these things is dropping from over $400 to slightly more than $200.
Fourth, smart phones are likely to sell more than 100 million devices and bring in over $34 billion. And finally, everything else is still viable. Consumers are still planning to buy video, DVDs, and TVs. Imaging products like DSLRs and action cameras are hot items as our automotive accessories like navigation devices. Audio and gaming is likely to see reduced growth, as gaming accessories and games are being displaced by mobile devices.
Retail trends show a wide range of influences. September is now becoming the new December as product launches move to the third quarter. Improvements in supply-chain efficiency also allow shorter lead times between announcement and availability. Second, holiday sales prospects are not that bright making Black Friday more important. Almost 40 percent of sales occur in November. Retailers have trained consumers to wait until Thanksgiving.
Third, the increasing influence of mobile devices allows much more price comparison. Two out of five people plan to use their phones to compare, share with friends, and sometimes even purchase products, and new apps are making these functions easier. Warehouse stores will see a drop in total traffic and sales as the online stores grow in prominence. Fourth, the pricing trends show that open price points are flat from last year. Average TV prices are starting to increase, so consumers are expecting deals, but there are likely to be the same as last year.
And finally, successful strategies will include reservation systems and low-cost or free layaway plans. Many stores are planning on adopting same-day delivery and free in-store pickup from an online purchase. Companies must plan to respond to the rampant comparison shopping. Despite the move to online purchases, point of purchase displays and as are still useful to drive consumers who do show up to the stores. These ads also have to have copies at the checkout desks to remind people of the specials if they forgot to pick up the item at the main display.
