The NPD Group reports lackluster holiday sales contribute to slow second half growth
Consumer technology* sales reached a record $129 billion in 2007, a healthy 6.5 percent increase over 2006, according to The NPD Group’s consumer tracking service. However, sales growth for the second half of 2007, which accounted for 54 percent of the year’s revenue, only grew by 5 percent. Holiday sales didn’t help. According to NPD’s weekly point-of-sale data** U.S. retail sales revenue from November 18 through December 29, 2007 fell almost 2 percent, to $ 9.6 billion.
“Such a disappointing holiday season, compounded by a lackluster back-to-school season, as well as economic concerns, took a toll on consumer technology revenue growth in the second half of 2007,” said Stephen Baker, vice president of industry analysis, The NPD Group. “It’s concerning to see sales growth slowing, but not unexpected as industry trends point towards a consumer technology market offering its customers more evolutionary, rather than revolutionary, technological improvements in the coming year.”
Almost half (47%) of all consumer technology spending in 2007 was concentrated on five categories: notebook computers, LCD TVs, desktop computers, digital point-and-shoot cameras, and MP3 players. That’s up from 42 percent in 2006 and 36 percent in 2005.
“The consumer electronics industry isn’t exempt from consumers worrying about the economy, but historically we have not seen an impact on electronics sales from the overall economy,” said Baker. “The overall decline is more related to market saturation in many of the highest unit volume categories, such as cameras and MP3 players. In addition we saw brands and retailers reduce their discounting levels to maintain higher pricing, a strategy that can lead to more profits even in the face of declining demand. We expect to see a continued trend toward more stable pricing, and lower growth, in 2008.”
2007 Top Revenue Producing Categories
| Category | 2007 Dollar Volume | 2007 Dollar Volume Percent Change |
| Notebook Computers | $19.6 billion | 23% |
| LCD TVs | $13.5 billion | 74% |
| Desktop Computers | $9.1 billion | 2% |
| Digital Point-and-Shoot Cameras | $6.6 billion | -3% |
| MP3 Players | $6.3 billion | 7% |
Source: The NPD Group/Consumer Tracking Service
Holiday 2007 Top Revenue Producing Categories
| Category | 2007 Holiday Dollar Volume | 2007 Holiday Dollar Volume Percent Change |
| LCD TVs | $1.7 billion | 51% |
| Notebook Computers | $1.1 billion | 12% |
| Digital Point-and-Shoot Cameras | $737.5 million | -11% |
| MP3 Players | $700 million | -11.5% |
| GPS | $388.6 million | 170% |
Source: The NPD Group/Retail Tracking Service
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/.
*Consumer technology sales include IT, imaging, audio, video, and consumables.
** NPD’s weekly POS information is derived from a subset panel of retailers that also contribute to NPD’s projected monthly POS panel
