ChangeWave Survey Shows Largest Consumer Electronics Decline Since 2002 - By: Paul Carton

In a striking sign of economic turbulence, consumer electronic sales are plunging nationwide, with the downturn even extending to long-time favorites like the iPod and digital cameras.

A recent ChangeWave survey shows a sudden huge pullback in consumer retail purchasing on electronics by U.S. consumers - the largest one since we began measuring spending trends back in 2002.

From February 18-25, we surveyed 4,427 consumers on a wide range of popular gadgets in the consumer electronics industry, including LCD TVs and video game consoles.

The survey found only 19% of respondents say they'll spend more on electronics over the next 90 days compared to 33% who will spend less - an unprecedented sign of weakness in the consumer electronics space.

Hardest Hit Retailers

Best Buy (45%; down 6-pts) and Circuit City (14%; down 3-pts) are the key electronics retailers that will be hit hardest by the spending downturn. Amazon (16%; down 3-pts), Apple (6%; down 3-pts) and eBay (7%; down 2-pts) will also register declines in consumer retail spending.

At the same time, Costco (23%) and Wal-Mart (12%) are the top two stores bucking the electronics downturn - both of which look set to maintain their consumer electronics market share going forward.

Hardest Hit Gadgets

Several top electronics will be hit hard over the next 90 days, including LCD TVs (10%; down 4-pts), digital cameras (7%; down 4-pts), cell phones (8%; down 6-pts) and iPods (2%; down 4-pts) - all which are down significantly from a year ago.

Despite the lack of enthusiasm for these formerly popular gadgets, there are still some bright spots in consumer electronics. The Nintendo Wii remains wildly popular among consumers, with 8% saying they plan to buy one in the next 12 months - up 3-pts from a year ago.

Demand for High-Def DVD players is another bright spot, where 9% of respondents say they are planning to buy a Blu-ray HD DVD player in the next 90 days. GPS devices (9%) also continue to hold their own among consumers.

Tax Rebate To The Rescue?

As reported in our recent consumer spending report - No Signs of a Bottom (ChangeWave Survey Shows Continued Deterioration in Consumer Spending) among respondents expecting to receive a special tax rebate this spring, only 7% say they're likely to spend it on consumer electronics.

By comparison, a strong majority say they're likely to use the special rebate to either pay down debt (33%), invest the money (23%), or save the money (21%).

Thus, there is frightfully little in our findings to suggest the economic stimulus package will jumpstart consumer spending on popular electronic devices. Rather, our findings point to an increasingly preoccupied American consumer who has fallen out of love with gadgets.

Investors should check to see their seat belts are securely fastened because turbulence is ahead.

About the Author

Paul Carton is the Research Director of the ChangeWave Alliance expert network. Visit us to see more ChangeWave Electronic findings and to receive ChangeWave Technology Alerts.

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