24 November 2010 15:52 [Source: ICIS news]
HOUSTON (ICIS)--US consumers are likely to purchase fewer electronics items in the upcoming holiday shopping season than in 2009, sources said on Wednesday, potentially cutting future demand for chemicals used in those products.
The Friday following the US Thanksgiving Day holiday is typically referred to as “Black Friday”, when many retailers offer significant discounts to spur holiday gift buying.
Black Friday, which falls on 26 November, unofficially signals the beginning to the US holiday gift-shopping season. Black Friday usually represents about 6% of total holiday sales, according to the US National Retail Federation (NRF).
It has been accompanied in recent years by “Cyber Monday”, in which online retailers offer major price cuts on the following Monday.
But this year, only 19% of shoppers plan to shop in electronics stores for holiday gifts, down from 26% in 2009, according to US consumer research firm The NPD Group.
Likewise, just 16% of surveyed shoppers ranked electronics as their top gift to give, down from 24% in 2009.
In recent years, increased holiday sales of such technology products had pushed up chemical demand.
“Across many categories, we have seen [electronics prices] barely budge in 2010 compared to prior years, and in many cases, we have seen pricing actually rise,” said Stephen Baker, vice president for industry analysis with The NPD Group.
“With consumers trained to expect 20-25% price declines every year, small movements of 5% or less are unlikely to inspire them to rush into the stores and are more likely to convince them to wait on the expectation that those dramatic price declines will materialise,” he continued.
“Unfortunately, we appear to be in a period of stable pricing as the price drops of the last few years have left little room to maneuver while absolute prices hit rock bottom and the industry searches for profitability.”
In related electronics segments, interest in movies and DVDs as well as video gaming systems and video games were also predicted to be lower in 2010, the group said.
“This year, the real challenge is the absence of newness and excitement,” said NDP’s chief industry analyst Marshal Cohen.
According to the American Chemistry Council (ACC), discs such as CDs and DVDs have the largest proportion of chemicals among their total value of materials at 38%. By comparison, chemicals make up 33% of semiconductors, 17% of circuit boards, 13% of printers and modems and 12% of audio and video equipment, the ACC said.
US PC sources said that interest in new electronics items such as blu-ray discs seemed to be rising earlier in the year, but now appeared likely to be flat from 2009 holiday levels.
The PC sources noted that production on items to be purchased in 2010 was already complete. As such, any upstream chemical impact would be felt in 2011, when holiday sales from the coming weeks are used as a baseline for projections.
Other chemicals used in electronics items include polyvinyl chloride (PVC) for wiring insulation, nylon for electrical components, polyethylene (PE) for packaging and epoxy resins for circuit boards, according to the ACC.
For all sectors, the NRF projected US holiday sales to rise 2.3% from 2009 levels to $447.1bn (€335.3bn), an increase it termed moderate. The 10-year average annual growth rate is 2.5%, the group said.
Additional reporting by John Dietrich
($1 = €0.75)
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