Canadians cut back on CE spending

TORONTO (22 August 2011) - Sales of LCD televisions fell 19% in the second quarter as Canadian consumers cut back on their purchases of all categories of consumer electronics, according to the local branch of the NPD Group, a private think tank specializing in tracking technology trends.

NPD noted that almost every CE category saw sales decline on a year-over-year basis with personal entertainment products - which includes televisions - showing the highest overall decrease in both unit and dollar sales although mobile and IT technologies recorded modest gains.

"The market as a whole, including consumer electronics, IT, imaging and video games, saw an 11% fall in revenue," the group said, adding, "shoppers are curtailing their spending on a variety of consumer electronics."

While LCD televisions were down 19%, NPD report camcorders and digital still cameras were down 29% 15% respectively.

Video-game technology shows a similar trend, with the sale of gaming software having decreased by 3% and gaming hardware by 2%.

"Though these recent sales figures show Canadian consumers spending less on entertainment products, we shouldn't assume this to be a long-term trend," Mark Haar, NPD's director of consumer electronics said in a statement. "Given the technological advancements that occur regularly in this industry, purchasing cycles tend to ebb and flow in sync with the need to upgrade. We also tend to see gradual price reductions as new devices penetrate the market."

However, certain products within the IT and mobile sectors did show unit growth in Q2 2011. Hard disc drives, printers and personal computers increased 21%, 19% and 4% respectively, while cell phone accessories and mobile multimedia have had a year-over-year unit increase of 40% and 21%.

Although the unit growth in these areas is rising, there is no corresponding dollar growth - on the whole, these sectors also experienced a decline in revenue.

"The nuances we're seeing in dollar growth versus unit growth are not surprising considering the country's ongoing economic obstacles coupled with the perennial trend of price discounts on products that have moved from early adopter stage to the mass consumer," said Haar. "The industry continues to lower prices to accommodate a variety of factors, so unit volumes and dollar growth are not necessarily going to be in sync."

Manufacturers hoping to increase their numbers in the third and fourth quarters of the year can look forward to the fall. The September to December period represents the busiest shopping season of the year, with back-to-school and holiday purchases typically driving both unit sales and revenue growth across most industries.