Consumer Tech Sales Rebound From Weak Economy

Leading the pack were notebook computers and LCD TVs, followed by digital point-and-shoot cameras, portable digital players, inkjet cartridges, and desktop computers.
U.S. retail sales of consumer technology in May rose for the first time this year, as the industry showed signs of rebounding from a weakening economy, a market research firm said Tuesday.

Sales increased more than 7% from a year ago to more than $5.4 billion, The NPD Group said. The growth was driven primarily from the six top revenue-producing categories, which accounted for 49% of sales. In May 2007, the same categories accounted for 44% in sales.

Leading the pack were notebook computers and LCD TVs. Each category had a 14.7% share of the market in terms of sales. A distant third were digital point-and-shoot cameras, 5.7%; followed by portable digital players and inkjet cartridges, each 4.6%; and desktop computers, 4.5%.

For the first four months of the year, sales have been down or flat, NPD said. Despite the May bump, total year-to-date sales is down 3% from the same period last year. Without the May sales, industry revenues were declining 5% for the year.

People likely used their one-shot federal tax rebates, issued by Congress as an economic stimulus, to buy electronic gear in May, NPD said. So the real test will be in the third and fourth quarters.

"We've reached a point of market saturation in some of the biggest growth categories, and as a result, regardless of economic conditions, growth through the key back to school and holiday seasons will be challenging," Stephen Baker, VP of industry analysis for NPD, said in a statement. "Retailers and manufacturers will have to provide more compelling products, promotions, and pricing as we enter the critical second half of the year if they are going to deliver meaningful growth in 2008."

One good sign that consumer electronic sales worldwide could be picking up is the revenue increase for semiconductors, which are the brains in electronic devices. Gartner this month raised its forecast for the year by more than 1% to 4.6% over 2007. Revenues this year are expected to reach $286.5 billion.