CEMA: Holiday Shopping Season Looks Promising

The holiday retailing picture looks promising, according to several recent reports. Both the Consumer Electronics Manufacturers Association and the Recording Industry Association of America were predicting up seasons after mid-year numbers came in higher than expected. Overall, retail sales were up 0.6% in November, reported the Wall Street Journal on Monday, December 14.

A strong increase in online sales has been accompanied by plenty of traffic in traditional stores and shopping malls. The ongoing comic opera in Washington, a military attack on Iraq, and economic crises in Asia and Russia seem not to have ruffled American consumers, who are taking advantage of declines in energy costs and food prices. The continually rising stock market gives them confidence in the economy---which translates to a willingness to spend money.

American consumers will be "the last ones to give up on the economic expansion," said David Orr, chief capital-markets economist at First Union Corporation in Charlotte, NC. "They will have to be pulled kicking and screaming out of the malls," Orr told the WSJ. Most consumers say they expect to spend at least the same amount of money on holiday gifts this year as they spent last year, and quite possibly more, according to CEMA's 5th Annual Holiday Purchase Patterns survey, released October 14.

According to the survey, 79% of consumers believe the US economy is about the same or better now compared to last year, and only 20% think it is worse. American optimism over the economy overshadows all other news. A survey taken by NBC news the day that the US House of Representatives voted to impeach President Clinton indicated that he enjoys a 70% approval rating among the general public---primarily due to economic factors.

25% of holiday shoppers expect to spend more money on gifts this year than they did last year. More than 80% say that fluctuations in the stock market will not affect their holiday spending. At least half of those surveyed say they will spend at least as much this year as last.

"The outlook for retailers and manufacturers is rosy as the holiday season approaches," said Gary Shapiro, CEMA president. "While stock-market fluctuations garner much media attention, they don't appear to have a significant influence over holiday spending patterns for most consumers."

Digital TV---not a big seller yet, but a technology drawing curious customers into stores---and DVD are two new formats that are heating up the electronics marketplace. DVD players are now available for under $300, and have been reported in short supply by some retailers. CEMA's survey indicates that 30% of consumers plan to buy video products as holiday gifts. 30% also plan to buy audio products, 27% will buy computer products, 18% will buy mobile electronics products, and 21% will buy home-office products. VCRs, which can now be found for under $100, are the video product consumers are most likely to buy this holiday season. Portable stereos, desktop PCs, car stereos, and cordless phones are other products most likely to be purchased.

While the majority of sales will take place in person, an increasing number will be via the Internet. 42% of American households now have Internet access---almost exactly the same percentage who are computer-equipped. 50% will surf the Net somewhat to shop or find information about holiday gifts. Over 60% of these Internet shoppers (12.5 million households) are likely to purchase a gift via the Internet. Most Internet users are likely to be last-minute shoppers, the survey indicated.

As of December 16, United Parcel Service was promising delivery by Christmas Day only for "next-day" delivery packages, the most expensive of the company's many shipping options. Savings earned by buying gifts online may be offset by extravagant shipping charges to get them to their destinations on time.

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