Do Weak Black Friday Sales Bode Ill for the Holiday Season?

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Black FridayWith the economy still struggling and the threat of the fiscal cliff looming overhead no one expected this Black Friday to break records, but the figures were even worse than predicted with Consumer Electronic sales dropping 5.6 percent.

The NPD Group reported, that the decline in sales were steeper than anticipated after last year showed a 4 percent decline in Consumer Electronics sales.

Traditionally, Black Friday has always served as a catalyst for the Holiday Season spurring consumers into a shopping frenzy that normally extends throughout December. However, Black Friday’s slow start may be indicative of challenges to come for the Consumer Electronic industry.

Stephen Baker, vice president of industry analysis at NPD explains: “In an unbalanced market, where just a few categories deliver significant dollars, and even fewer offer any growth, the ability to deliver positive results will remain difficult for companies exposed to the entire Consumer Electronics marketplace.”

Notebook PCs in particular felt the effect of less than stellar sales, with unit sales falling 10 percent and overall revenue decreasing 5 percent. Apple sales remained stagnant, while Microsoft recorded a 10 percent drop in Windows Notebook sales. Windows 8 represented 89 percent of notebook sales with an ASP of $368, and touchscreens accounted for 3 percent of sales with an ASP of $668.

While these numbers are troubling and may serve to depict larger issues present within the Consumer Electronic industry, they don’t tell the whole story. Black Friday numbers are by and large dependent on in-store retail purchases, making the Black Friday sales figures a bit skewed as they ignore the impact of the continuously growing online consumer base.

In stark contrast to Black Friday’s slouching sales figures, Cyber Monday proved to be the biggest U.S. online shopping day in history recording $1.46 billion in sales, according to a comScore report. The record marks a 17 percent growth from last year’s sales and a 15 percent increase in online sales for the month of November; resulting in total of $20.4 billion in online sales so far this Holiday Season (as of Dec. 2).

The Consumer Electronic industry saw a boost from last year’s online sales; recording a 17 percent increase making it the fourth largest shopping category this Holiday Season. The Consumer Electronic Industry was able to produce positive growth despite the softening sales of flat panel TV sales, though comScore notes that a large reason for the turnaround comes from the continued growth of Smartphones and Tablets.

The momentum from Cyber Monday carried into the following Tuesday (Nov 27) and Wednesday (Nov 28), as all three days breached the 1 billion dollar mark, with sales recorded at $1.26 billion and $1.11 billion respectively.

With the simultaneous decline of Black Friday figures and increase in online sales it easy to see that a portion of consumers are simply migrating online. However, that rapid growth of online consumption hardly equates to the much larger brick and mortar retail industry.

The lower than expected Black Friday sales still present an issue for the Consumer Electronic industry, but thanks to strong online sales the industry seems to be in a better position than first conceived.  

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