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Black Friday Consumer Technology Revenues Increase As Growth Prospects Slow

Total consumer tech revenue grew by just 6 percent to $2.2 billion versus 2006; LCD TV, GPS and notebook computers show most positive sales results

Retailers and economists alike are looking for signs that this holiday season will be as lucrative as last year, but the actual results from Black Friday offer little cause for full-voiced rejoicing. According to leading consumer and retail information provider The NPD Group’s weekly point-of-sale (POS) data(1) for the week ending November 23, 2007, consumer technology retail sales(2) grew by just 6 percent over 2006 to $2.2 billion. This figure is less than one-half of last year’s growth rate, and it’s the first time in the six years NPD has tracked this data that dollar-sales growth dipped below double digits.

“While revenue growth declined this year, we’re at least seeing a more rational pricing environment than last year, as well as a more stable competitive outlook,” said Stephen Baker, vice president, industry analysis, The NPD Group. “This is most certainly a positive harbinger of expected profitability throughout the holiday season, even if it calls growth prospects into some doubt.”

Year-over-year consumer technology sales

2004 2005 2006 2007
Sales $1.6 billion $1.9 billion $2.1 billion $2.2 billion
Growth 15% 12% 6%

Last year NPD noted lackluster unit-sales growth for consumer technology products, despite the heavy customer traffic. Black Friday 2007 was different. This year unit-sales were up 9 percent, which is far ahead of the 6 percent dollar growth and a reversal from prior years. The consumer technology arena tends to be dominated by large and rapidly growing segments; however, this year there has been a further narrowing of the market, as the growth rate for plasma TVs, digital cameras and MP3 players declined sharply.

Areas like notebook computer accessories and bags, camera accessories and cases, remote controls, digital cables, and computer memory all performed well — and likely contributed to the “basket-of-goods” mentality retailers were trying to impress upon their customers.

2007 Top Five Growth Categories

Revenue Growth Retail Price
1. GPS systems 237% $189
2. Digital Frames 171% $67
3. LCD TVs 79% $642
4. Camera Accessories 44% $25
5. Digital SLR Cameras 33% $655

Black Friday leaders: LCD TVs, notebook computers, digital frames, GPS
LCD TVs were the star of Black Friday this year. Unit volume increased by 45 percent and revenue jumped 80 percent. Most of this result was driven by the enormous change in the product mix that has occurred over the past year. This year 30-inch-and-larger products outsold the smaller sizes, which led to triple-digit increases in units and dollars among the larger sized TVs. The resulting triple-digit increases in units and dollars among the larger sized LCD TVs only required a 14 percent decline in average selling prices (ASPs).

Notebook computers also drove some solid unit increases and dollar gains during Black Friday, but — as they have all year — they represented something of a comedown from last year. Notebook sales volume jumped almost 30 percent, while revenue increased nearly 17 percent. Their average price declined by less than 10 percent this year, compared to 18 percent last year.

“When looking for the best performing category of 2007, don’t look any further than GPS,” Baker said. “While sales volumes were strong last year, it was more of an introduction for the category, than it was the establishment of a long-term opportunity. Sales this year appear to cement GPS as a long-term major player.”

GPS category growth this year was also impressive. Unit sales increased six-fold over last year. In fact, more GPS devices were sold this year, than PCs, 30-inch-and-larger LCD TVs, and plasma TVs. Revenue increased 237 percent from last year, breaking the $100 million barrier, which pumped its rank to the sixth-largest category on a dollar-sales basis. Overall ASPs fell to under $200 from $322 last year.

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Another category break-out performance was digital picture frames. Unit volume for Black Friday 2007 reached nearly 500,000 units and $30 million. Other “hot” categories slowing

For the second year in a row, more MP3 players were sold than any other product, but the year-long category sales slowdown was still felt during Black Friday. Unit-sales volume was up slightly (4 percent), which likely was driven by the success of recently introduced Apple iPod products.

Digital cameras have been a perennial staple of Black Friday advertising for many years. This year point-and-shoot Black Friday ASPs fell by 14 percent from 2006. Unit-volume growth in 2007 was just 11 percent; consequently, overall point and shoot revenues declined 5 percent against 2006.

“Despite the relatively poor overall results we remain optimistic about the holidays,” Baker said. “Given the position of many of the largest categories on the growth curve, it was inevitable that overall volume growth rates would decline; however, a continuation of the more benign pricing environment noted on Black Friday should make for a reasonable, but not spectacular, holiday selling season.”

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us or visit http://www.npd.com/.

(1) NPD’s weekly POS information is derived from a subset panel of retailers that also contribute to NPD’s projected monthly POS panel.

(2) Consumer Technology sales include IT, imaging, audio, video, and consumables.

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