Steady in Rocky Seas
Dec 1, 2001 12:00 PM,
MERCHANTS ALL OVER THE COUNTRY ARE NOW WORKING THROUGH the last push of the fourth quarter earnings season. We are all aware of the drastic drop in the Dow and the market fluctuations that have plagued us this year. The trends that were apparent earlier in the year concerning the state of the economy were certainly an indicator of changes to come; and the economy continued to slow through the middle of the year. Then the events of September 11 occurred and the new war on terrorism began. Some believe these events pushed things over the edge. Third quarter earnings were down in virtually all segments of the U.S. economy. But the question now is: What will the fourth quarter, traditionally the make or break season for the year’s earnings, bring us?
Brand new research from the Consumer Electronics Association predicts how holiday purchase patterns will go for electronics products. The 8th Annual Holiday Purchase Patterns survey was performed on October 1, nearly three weeks after September’s tragedy. It is likely the best indicator as to how consumers are really feeling about the coming season. A representative sample of 1000 households was contacted. The results show that 77% of consumers plan to buy at least one consumer electronics product as a gift this holiday season. It is no surprise that digital electronic products, such as DVD players, were among the top products listed. And although 70% of consumers feel that the state of the U.S. economy is worse than it was at this time last year, they expect to spend roughly the same amount on gifts as they did last year.
So what does this have to do with audio and video contractors and the installation market? The first parallel is that consumers seem to be relatively calm about the economy, despite the gloomy outlook in the press. This means that, although the purchase of durable goods such as cars and major appliances may be down, people are less willing to give up some electronic creature comforts. Furthermore, when times get tough, people still look for diversion both in and out of the home.
“Consumers’ concerns over the economy and safety are leading them to recognize that consumer electronics products allow families to stay connected and share time at home,” said Gary Shapiro, president and CEO of the CEA. The survey points out that the likeliness of consumers to buy electronics products as gifts is up in every single product category, with video products up five points and audio products up four points from last year. This is, in and of itself, remarkable considering the economic climate. And it is certainly good news. With mortgage rates at a historic low, the U.S. government is doing everything in its power to spur on consumer home purchases; and with more homes comes more residential installation business. This could be the silver lining for the economy in our industry. We all move ahead with cautious optimism, and we at S&VC will continue to do our best to provide data and information as the future unfolds.
For those interested in reading more, the complete 8th Annual Holiday Purchase Patterns survey is available free to CEA member companies, and non-members may purchase the study for $495 through the CEA Market Research Web site at www.ebrain.org.