The shaky future of the U.S. economy seems to have done no favors for the consumer electronics industry on Black Friday, as market research firm The NPD Group reports that electronics retail sales dipped 5.6 percent from last year.
The drop was larger than anticipated, and considering that 2011 Black Friday sales saw a 4 percent decrease in their own right, the news certainly isn’t encouraging.
The report notes that PCs, Android tablets, and televisions accounted for 58 percent of all retail sales dollars, which in and of itself was a 7 percent increase over last year though. Android tablets in particular experienced a 91 percent revenue growth this Black Friday season, even though their average selling price (ASP) fell from $219 to $151.
Four percent more flat-panel TVs were sold over Black Friday this year, but their collective revenue declined 6 percent as ASP dropped from $367 to $333. Notebook PCs continued their slide, with revenue dropping 5 percent, while both point-and-shoot cameras and MP3 players fell hard as well.
As far as the smaller electronics categories went, the likes of detachable lens cameras, headphones, sound bars, and streaming-capable speakers all saw fairly significant revenue upticks year over year.
While these overall numbers do give off a decided sense of doom and gloom for the U.S. electronics market, there are still a few outliers to consider here. First is with the report itself, which did not include such products as Amazon’s Kindle line, the Apple iPad, Microsoft Surface, mobile phones, and video games. Second is the possibility of consumer “showrooming,” where prospective buyers see what they want in stores but don’t actually buy anything until they shop online at a later date.
Thirdly, and perhaps more importantly, is that consumers have been migrating in droves from brick-and-mortar retail shops to the online and mobile spaces for their shopping needs.
Take Internet analytics company comScore’s report earlier this week, which revealed that Black Friday’s online counterpart, Cyber Monday, generated $1.46 billion in online spending on its own — the heaviest in history. Three days of that “Cyber Week” eclipsed $1 billion individually, Black Friday’s online sales jumped up 26% to over $1 billion, and the entire holiday season to date has generated over $20.4 billion online.
This is important. Since online stores frequently offer good deals not just on Black Friday or Cyber Monday, but at any point in the year, many are now asking a simple question: Does this kind of dip in Black Friday sales figures really mean as much as it did a few years ago?
TechnologyGuide reached out to The NPD Group’s VP of Industry Analysis, Stephen Baker, to get his thoughts on the matter. He concurred that, while still indicative of the U.S. market, the annual shopping event may not be as significant as it was before, primarily because of the way many retailers have featured elongated sales periods surrounding the Black Friday festivities.
“I would say Black Friday is much less of a touchstone for a whole bunch of reasons,” Baker told us. “One is that everybody’s extended promotional season is far ahead as they possibly can, so we see so many more promotions not just on Black Friday or Thanksgiving, but the week before, and the week before that. So there’s a lot more preparation [for NPD] that goes into this kind of holiday piece.”
Online retailers’ recent success is often attributed to a multitude of reasons, from ease of access to greater variety of available products. But another commonly held rationale for online shopping’s success — and one that could directly cut into Black Friday’s retail figures — is its prominence of limited time, highly-discounted “flash” or “deal-of-the-day” type sales from sites like Amazon and Groupon. Yet, Baker contends that the relative popularity of such short sales isn’t affecting brick-and-mortar shops or even dedicated online retailers as much as some may think.
“In terms of something like Groupon or flash sites, those are more of a pimple. They don’t have any impact on what’s going on at retail,” he said.
“The real challenge for retail stores and for online is finding compelling products at compelling prices, given the fact that they’re competing every single day around product, pricing, and the pace of product change. And in most electronics categories, that [pace of product chage] isn’t exactly at the same rate as it was a few years ago.”
ComScore’s VP of Industry Analysis, Andrew Lipsman, agreed with that assessment of flash sales, but also stressed the importance of context when it comes to major shopping events like these. When we asked him whether or not flash sales and other special promotions could even affect major online retailer events like Cyber Monday, he responded that anyone who proclaims Cyber Monday to be “not important” because of such sales is speaking in “complete hyperbole.”
“At most, when you have these other promotions, they maybe can pull slightly from the growth that may have occurred otherwise. But let’s still be clear: We saw above-average growth rates on Cyber Monday. We saw almost one and half billion in spending, and it was the heaviest online spending day in history. There are a lot of superlatives to be applied to that day.”
Cyber Monday‘s Gain
But even though the flash sale phenomenon may not be able to significantly disrupt primetime events like Black Friday or Cyber Monday, it still appears that online shopping’s rise is actively contributing to Black Friday’s sinking numbers.
Yes, online retailers still have a long ways to go before they can begin to stand on equal ground with traditional stores. One need only look at this year’s sinking Black Friday numbers to see that, despite online and mobile’s continued growth, when brick-and-mortars’ numbers dip, retailers’ numbers as a whole dip with them.
But as Lipsman explained, Cyber Monday traditionally wasn’t even the biggest online spending day years ago. Instead, it served as more of a “kickoff day” that would lead to heavier spending days afterwards. However, since Cyber Monday was such an enormous shopping event this year — and since those later heavy spending days aren’t going away anytime soon — it would seem online stores could potentially boom into the holiday season, inevitably at the expense of their brick-and-mortar counterparts.
“As you get closer and closer to Christmas, there’s more and more demand concentrated,” said Lipsman. “And that’s what we’re going to continue to see. While Cyber Monday is a really big day — probably will be the heaviest day of the season — we’re going to see several billion dollar spending days as we go through the next few weeks.”