U.S. Consumer Technology Revenue Declines Nearly 5 Percent in 2009 as Average Prices Drop

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U.S. consumer technology* revenue fell almost 5 percent in 2009 to $106 billion dollars, according to leading market research company The NPD Group’s Consumer Tracking Service which tracks consumer electronics trends.

U.S. consumer technology* revenue fell almost 5 percent in 2009 to $106 billion dollars, according to leading market research company The NPD Group’s Consumer Tracking Service which tracks consumer electronics trends.

While overall revenue may have been down, that should not be taken as a sign that consumers were not buying. Total units sold increased marginally, with the industry selling over one billion devices, gadgets, and accessory products (excluding consumables). The slight increase in units wasn’t enough to offset the decline in average prices, however, leading to the decrease in overall revenue. Average prices dropped about 6 percent from 2008 to 2009 to an average of $92 for each piece of electronics purchased.

Sales results improved as the year progressed culminating in just a 1.5 percent decline in the fourth quarter, a huge improvement from 2008, when fourth quarter sales fell 7 percent Sales in the fourth quarter represented almost 32 percent of the year’s revenue. Fourth quarter 2009revenue growth represented the best quarterly results since the second quarter of 2008.

For the fourth year in a row brick and mortar retailers increased their share of consumer technology sales. The sales strength was propelled by computers and TVs, both of which saw retailers’ share of total sales increase more than two points. Best Buy once again sold the most electronics products in 2009 and gained more revenue share than any other retailer. Walmart, Staples, Target, and Apple’s retail store chain filled out the rest of the top five spots, according to NPD’s Consumer Tracking Service.

The top five online retailers were Dell, Amazon, Best Buy, HP, and Apple. The real success story in the online sales channel came from third party retailers, such as Amazon and Newegg. Third party online-only retailer sales increased 9 percent over 2008.

Consumers did cut back their spending, but not everyone did it equally. It was the broader middle class who cut back the most. Spending among consumers with incomes between $30,000 and $100,000 declined almost 8 percent from 2008. Lower-income consumers decreased their spending by 3 percent, and consumers with incomes over $100,000 only decreased their spending by a little more than 1 percent.

“The industry lost ground this year but in light of the overall economic conditions it was a performance that could have been much worse,” said Stephen Baker, vice president of industry analysis. “By retailers and manufacturers being aggressive on consumer electronics pricing that kept the consumer engaged and shopping, an important success story to remember in such a dismal year. Categories like computers and flat-panel TVs, despite very high selling prices, were able to see significant increases in unit volume through this tactic. The up-tick in fourth quarter results, while partly the result of a weak year-over-year comparison was also due to strong results from these categories, results that point to increased momentum as we head into 2010.”

*Consumer Technology sales include IT, imaging, audio, video, and consumables, and exclude video game hardware and software, PC software, and mobile phones.

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,700 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us or visit http://www.npd.com/ and http://www.npdgroupblog.com . Follow us on Twitter: @npdtech and @npdgroup.

FOR MORE INFORMATION:
Sarah Bogaty
+1 516 625 2357
sarah.bogaty(at)npd(dot)com

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