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By Paul Carton and Jim Woods
In a striking sign of economic turbulence, consumer electronics sales are plunging nationwide -- with the downturn even extending to long-time favorites such as the iPod and digital cameras.
A recent ChangeWave survey shows a sudden and dramatic pullback in U.S. consumer electronics retail purchasing -- the largest one since we began measuring spending trends in 2002.
During February, we surveyed 4,427 consumers on a wide range of popular gadgets in the consumer electronics industry, including LCD TVs and video game consoles.
Only 19% of respondents said they'll spend more on electronics during the next 90 days, compared with 33% who said they will spend less. This is an unprecedented sign of weakness in the consumer electronics space.
Hardest Hit Retailers
As can be seen in the chart below, Best Buy (BBY) and Circuit City (CC) are the electronics retailers that look to be hardest hit by the spending downturn. Amazon (AMZN) and Apple (AAPL) also registered declines in consumer retail spending, as did eBay (EBAY).
The top two stores bucking the electronics downturn are Costco (COST) and Wal-Mart (WMT), with 23% and 12%, respectively. Both retailers appear set to maintain their consumer electronics market share going forward.
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Hardest Hit Gadgets
Several top electronics appear set to take a big hit during the next 90 days. The list includes LCD TVs, digital cameras, cell phones and iPods -- all of which are down significantly from just a year ago.
Despite the lack of enthusiasm for these formerly popular gadgets, there are still some bright spots in consumer electronics. The Nintendo Wii remains wildly popular among consumers, and 8% of respondents said they plan to buy one in the next 12 months. This number is up three points from a year ago.
The demand for high-def DVD players is another bright spot, as 9% of respondents said they plan to buy a Blu-ray high-def DVD player in the next 90 days. GPS devices also continue to hold their own among consumers with 9%.
Tax Rebate to the Rescue?
As reported in our recent consumer spending report, No Signs of a Bottom, among respondents expecting to receive a special tax rebate this spring, only 7% said they're likely to spend it on consumer electronics.
By comparison, a strong majority said they're likely to use the special rebate to either pay down debt (33%), invest (23%) or save (21%).
Thus, there is frightfully little in our findings to suggest the economic stimulus package will jumpstart consumer spending on popular electronic devices. Rather, our findings point to an increasingly preoccupied American consumer who has fallen out of love with gadgets.
Paul Carton is the Research Director of the ChangeWave Alliance. Jim Woods is ChangeWave's Senior Editor. The Alliance is a network of 15,000 highly-qualified business, technology and medical professionals in leading companies of select industries. The Alliance is surveyed weekly on a wide range of business and investment research and intelligence topics.
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