cea 2014 holiday outlook and trends to watch
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CEA’s 21st Annual Holiday Outlook
Shawn DuBravac, Ph.D., CFA Chief Economist & Sr. Director of Research
shawnd@CE.org @twoopinions
Scoring Our 2013 Holiday Forecast
Source: CEA estimates from shipment data, consumer holiday surveys and macroeconomic data
2013 Holiday Forecast Assessment
Category 4Q2013 Holiday Forecast
4Q2013 Holiday Actual
Expected Holiday
Growth Rate Actual Holiday Growth Rate
Tablets 40.1M 37.1M 21% 12%
Flat panel TV 13.2M 12.0M 4% -5%
Ultra HD TV 25.8K 45.6K NA NA
Blu-Ray 5.2M 5.3M 6% 8%
Camcorders 456K 557K -45% -33%
Soundbar 1.3M 1.07M 42% 17%
MP3 10.6M 10.5M 1% 0%
2013 Holiday Forecast Summary
Series Projected 2013 Holiday Growth
Actual 2013 Holiday Growth
Overall Retail Sales 4.0% 4.2%
GAFO Retail Sales 2.7% 0.9%
Electronics Retailers 0.0% -1.3%
Online Sales 18.7% 15.7%
Mobile Sales 35.5% 20%
Consumer Spending on Tech
2.6% 0.9%
Looking Ahead to Holiday 2014
Key Holiday 2014 Themes
1. Improving Environment Supports Spending
Growth in Holiday 2014
2. Spending Growth Driven by Narrowly Defined
Demographics
3. Perennial Tech Devices Still Defining Holiday
Tech Gifts
4. Online Retail Broadens and Deepens, Mobile
Reshaping Commerce
5. Shop Early, Stop Early
Gift Giving Intentions Strong
2009
64%
% of consumers planning to spend money on holiday gifts
2010
65%
Base: random national sample of 1,019 U.S. adults
2011
76%
Q:B20: Please tell me what percent of your total holiday budget will be for each of the following types of holiday spending: food...gifts...travel...home
2012
80%
2013
86%
2014
87%
CE is the Gift to Give
2012 2009
77%
77%
% of gift buyers planning to buy CE as holiday gifts *
* Excludes CE Accessories
2010
76%
77%
2011
Q: B21: What % of your holiday gift spending will be on consumer electronics? Base: random national sample of 1,019 U.S. adults
2013
74%
2014
73%
% of U.S. Adults Buying Technology Gifts
50% 52%
46% 48% 49% 49%
58% 62% 64% 63%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Lower Spenders: Earning More; But Not Enough?
Reasons to Adjust Holiday Expenditures Lower
2010 2011 2012 2013 2014 Don't have the money 49% 71% 62% 66% 53% Concerns with the economy 68% 77% 66% 68% 46% Increased cost of living 47% 59% 56% 64% 50%
Earning less money 41% 52% 52% 49% 37%
Lost Job / Unemployed 32% 37% 34% 34% 18% Have What You Need 51% 55% 57% 67% 47%
QB18: You indicated you plan to spend less this year than last. Which of the following, if any, are reasons why you plan to spend less on gifts this year?
Base: random national sample of 1,019 U.S. adults
CEA Sentiment Tracking Steadily Higher
0
20
40
60
80
100
120
140
145
150
155
160
165
170
175
180
185
2007 2008 2009 2010 2011 2012 2013 2014
CEA Index of Consumer Expectations (Left)
CEA Index of Consumer Technology Expectations (Right)
11
Consumer Credit Accelerates
-15%
-10%
-5%
0%
5%
10%
15%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Revolving Credit (Y/Y % Change)
Holiday 2014 Spending Plans & Forecast
CEA Forecast: Holiday Tech Spending up 2.5%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
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66
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08
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11
20
14
Consumer HolidaySpending on Tech
Forecast
10-yr Average (4.7%)
20-yr Average (6.7%)
2014 Holiday Forecast Summary
Series 2013 Holiday Growth Projected 2014 Holiday Growth
Overall Retail Sales 4.2% 4.5%
GAFO Retail Sales 0.9% 1.1%
Electronics Retailers -1.3% 1.0%
Online Sales 15.7% 14.9%
Mobile Sales 20% 19%
Consumer Spending on Tech
0.9% 2.5%
Holiday Gift Spending Trend
$844 $772 $756
$909
$793 $766 $767 $785
$861
$753
$895
$162 $189 $200 $222 $222 $245 $251 $258 $248 $286
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Total Gifts
Total Tech
Allocation of Gift Spending on CE
Base: random national sample of 1,019 U.S. adults
2007 2008 2009 2010 2011 2012 2013 2014
% of gift spending
on CE 22% 28% 29% 32% 32% 30% 33% 32%
Amount $200 $222 $222 $245 $251 $258 $248 $286
15%
Spend More: 19%; $408
Spend Less: 25%; $188
2014 Average CE Gift Spending:
Q: B21: What percent of you gift budget will be spent on CE this holiday?
+44%
Shifts in Holiday Gift Spending Plans
22% 20%
22% 23%
18% 20% 21% 20% 19% 18% 19%
51%
41%
48% 48%
41%
46% 48%
44% 47%
50%
55%
25%
37%
28% 27%
41%
33%
26%
34% 32% 32%
25%
0%
20%
40%
60%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Spend More
Spend Same
Spend Less
Spending Growth Driven by Narrow Demographics
The Biggest Spenders: Demographics
35-54 Year Olds
$364 ($278)
Early Tech Adopters
$420 ($291)
HHs with Children
$319 ($287)
HH Income $100k+
$562 ($406)
2014 (2013)
Early Adopters: Spending Big This Holiday
$196
$296
$291
$212
$334
$420
Late
Mid
Early2014
2013
Who’s Driving Spending Higher?
Gender Male 39%
Female 61%
Age
18-34 9%
35-54 74%
55+ 17%
Children in HH
Yes 26%
No 74%
Tech Adoption
Early 57% Mid 23%
Late 19%
HH income
< $25K -3%
$25K to < $50K
9%
$50K to < $75K
45%
$75K to < $100K
-8%
$100K or more
57%
2. Perennial Tech Devices Still Defining Holiday Tech Gifts
Most Requested
2014 Holiday CE Gift Wish List - Adults
Q: B34: If you could receive one technology gift this holiday what would it be?
Base: random national sample of 1,059 U.S. adults
Smartphone, 7%
Blu-ray Player, 2%
e-Reader, 2%
TV, 8% Tablet, 13%
Desktop PC, 1% Digital Camera, 2%
MP3 Player, 2%
VG console, 7%
Notebook, 11%
Consumer Tech Big Five
$48.4
$25.8
$17.1 $14.3
$5.3
Smartphones Tablets LCD TV Laptops GameConsoles
Source: CEA
64% 45% 72% 66% 51% % HH
Owning
2014 Estimated Shipment Dollars (Billions)
2014 Growth Revenue = 1.9%
2015 Growth Revenue = 0.7%
Holiday 2014 Gift Purchase Intent
Mobile Devices Continues to Grow Holiday Gift Mix
0%
5%
10%
15%
20%
25%
30%
35%
40%2
00
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Video Game
System
Laptop PC
Portable MP3
Digital Camera
Smart Phone
eReader
Tablet
Smartwatch
Purchase Intent – Yes/Maybe
Base: random national sample of 1,059 U.S. adults
Holiday CE Gifts: Computers and Comm. Devices
eReader, 15%
Notebook 25%
Tablet, 26%
External Storage
12%
Computing 51%
Comm. Devices
30%
Smartphone 23%
Cellphone 6% (9%)
Hotspot Device 9%
2014 % (2013 %)
Holiday CE Gifts: Video and Imaging Devices
Video 39%
Digital Imaging
TV, 24% (19%) Digital Media Player
16% (13%)
Blu-ray or DVD Player, 14% (22%)
Action Camera 11% (6%)
Camcorder 8% Point-n-Shoot
8% (11%)
D-SLR 7%
2014 % (2013 %)
23%
Purchase Intent for TV Tech
TV Sizes / Features 2011 2012 2013 2014
Screen <40 inches 54% 48% 42% 42%
Screen 40+ inches 65% 72% 80% 82%
Screen 40-59 inches 69% 73%
Screen 60+ inches 36% 36%
Internet connected 51% 63% 61% 63%
2014 4K UHD TV Shipment Volumes
0
20000
40000
60000
80000
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
512,000
288,000
U.S. Market
Actual
Forecast
Source: CEA, CE MarketMetrics
= 800,000
Estimated Share of 2014 UHD Unit Volume
0%
10%
20%
30%
40%
50%
60%
70%
50-59 60-69 70-79 80+
32
Screen Size in Inches
Today’s TV Deals
Samsung UN55HU7250 Curved 55-Inch 4K Ultra HD 120Hz Smart LED TV
$2,399 >>> $1,799
VIZIO P552ui-B2 55-Inch 4K Ultra HD Smart LED HDTV
$1,399
LG Electronics 55LB6300 55-Inch 1080p 120Hz Smart LED TV = $899
Sony KDL55W800B 55-Inch 1080p 120Hz 3D Smart LED TV = $1,000 1080p
Holiday CE Gifts: Audio and Gaming
Audio 50%
(53%)
AVR, 9%
Portable Wireless Speakers 21%
MP3 Player, 16% (20%)
Soundbar 9%
Gaming 26%
(23%)
Portable Game
Console 12% (9%)
Game Console 22% (19%)
2014 % (2013 %)
Headphones, 26%
Holiday CE Gifts: Automotive and Accessories
Portable GPS, 11%
Automotive 21% (26%)
Hands-Free Kit 11%
Emerging Tech 19%
Smartwatch, 8%
Fitness Device, 10%
2014 % (2013 %)
Smart Thermostat, 3%
3D Printer, 4%
Arithmetic of Growth 2013 2014 2015
connected thermostats $77 $171 $254
smartwatches $158 $1,725 $3,630
health and fitness tech $854 $1,078 $1,285
3D printers $53 $76 $107
UHD $310 $1,913 $5,022
TOTAL Revenue $1,452 $4,963 $10,299
Growth 242% 108%
Total Industry Revenue $206,928 $211,001 $213,355
Emerging Categories
(1,452)
(4,963)
(10,299)
Total Industry Revenue
Without Emerging Categories $205,476 $206,038 $203,056
0.3% -1.4%
Building Out the Basket: Attachments
Streaming STB (37%) DVD player (35%) Blu-Ray player (32%) AVR (24%) Soundbar (20%)
Headphones (49%) App gift card (42%) Memory Card (39%) Case (37%) Smartwatch (20%)
Video Games (59%) VG Accessories (48%)
Headphones (51%) Earbuds (45%) Case (41%) Bluetooth headset (30%) Smartwatch (18%)
23% 26% 26% 24%
Holiday Season Dynamics
Online, Mobile Gain Momentum
Bricks vs. Clicks
% Very or Somewhat Likely to Purchase CE from …
Base: random national sample of 1,000 U.S. adults Q: B36: Where do you expect to shop for CE gifts this holiday?
2010 2011 2012 2013 2014
78% 77% 77% 75% 77%
46% 47% 46% 45% 54%
Brick and Mortar
Online
Consumers Shift Shopping Patterns for Holiday
26% Plan to Buy More
Holiday Gifts Online This Year
42% Tend to Shop at Different
Retailers Than They Normally Do During the Holiday Season
67% of consumers
buying CE will use a mobile device to help
them shop for CE.
12%
2014 Holiday Mobile Channel Sales
Of Online Holiday Sales
$11.5 Billion
Mobile Holiday In-Store Shopping Activities
Check or compare product prices 84% Get product information 78% Search for or use coupons or discounts 74% Receive special offers or discounts from the retailer 73% Check product availability in a store 73% Read customer reviews for a product 71% Buy an electronics product from the retailer where you are shopping 66% Buy an electronics product from a different retailer than where you are shopping 59% Use location-based applications to check in to the retailer’s social media sites 35%
Among those planning to use a mobile device to shop for CE
Shop Early, Stop Early
Another Short Holiday Shopping Season
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Are fewer shopping days pulling sales forward or emphasizing Black Friday?
# Sh
op
pin
g D
ays
Pulling Holiday Forward
Kmart – Merry Birthday Ad, Sept. 5, 2014
Consumers Intend to Shop Earlier, Not Later
2006 2007 2008 2009 2010 2011 2012 2013 2014
September or Earlier
22% 18% 17% 16% 17% 15% 16% 14% 18%
October 21% 19% 16% 19% 17% 16% 11% 11% 13%
November 29% 31% 36% 33% 32% 35% 39% 38% 38%
December 23% 26% 26% 25% 27% 28% 25% 30% 23%
Don’t Buy Gifts 3% 4% 5% 7% 7% 5% 7% 7% 8%
• Early promotional moves by industry/channel
• Omnipresence of deals – all season long
• Black Friday reigns supreme
Q: When do you typically start buying gifts?
Base: random national sample of 1,059 U.S. adults Q: B26: In which month do you typically start buying gifts?
When Consumers Expect to Buy Most Gifts
October or earlier (Net) 16%
September or earlier 9%
October 7% November or December (Net) 83%
November 49% In November before Thanksgiving 16% From Thanksgiving (incl. Black Friday) 33%
December 34%
Timing of Shopping, Deals Governs Spending
$343
$306
$255
$291
October or earlier In November beforeThanksgiving
In November,Thanksgiving through
end of month
December
Base: 1,000 U.S. adults Q: Thinking about your shopping patterns during the holiday season, when do you typically START buying gifts? Do you START buying gifts in . . .
Black Friday 2014
It’s All About the Deal
42% 50% Make an
Unplanned Purchase Based on
a Deal
Shop Specific In-Store Holiday
Sales Events
Walmart Black Friday Prep
Can Holiday Deals Get Any Better? Nope.
Deals Will Be … 2010 2011 2012 2013 2014 Not as good as last year 17% 19% 15% 14% 13% About the same as last year 53% 53% 62% 69% 68% Better than last year 26% 23% 17% 13% 14% Don't know 5% 5% 6% 4% 5%
Where Will Consumers Learn About Deals?
17% (+4%)
28% (+6%)
30% (+2%)
42% (+5%)
49% (+5%)
49% (-2%)
56% (-9%)
61%
61% (-8%)
63% (-9%)
65% (-4%)
65% (-8%)
Text notification
Apps
Social media
Email notifications
Online advertisements
Retailer website
Newspaper advertisements
Internet Search
Signs and advertisements in a store
TV ads
Circulars or ads in the mail
Friends or family members 2014
(Change)
Retailers Must Meet Consumers Expectations
Product pricing 92% Deals
Ease of making a purchase 87% Online, Self-
Checkout
Return policy 87% Gift Receipts
Convenient to shop at 84% Location! Pop-Ups?
Past experiences with a retailer 82% Loyalty Programs Ability to get the product immediately 79%
Site-to-Store Shipping
Availability to get the latest products 72% Promote New Tech Variety of products sold, beyond electronics 49% More than Tech?
Shopping Criteria Retail Strategy %
Key Holiday 2014 Themes
1. Improving Environment Supports Spending
Growth in Holiday 2014
2. Spending Growth Driven by Narrowly Defined
Demographics
3. Perennial Tech Devices Still Defining Holiday
Tech Gifts
4. Online Retail Broadens and Deepens, Mobile
Reshaping Commerce
5. Shop Early, Stop Early
Questions?
Shawn DuBravac, Ph.D., CFA Chief Economist & Sr. Director of Research
shawnd@CE.org @twoopinions
Steve Koenig Director of Industry Analysis
skoenig@CE.org @koenigsteve
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