Consumer electronics have long been among the most popular holiday gifts, with fierce competition among shoppers for day after Thanksgiving deals on flat screen TVs and laptop computers. This year, everyone expects the economic crisis to dampen the appetite for gadgets. But how much? Compared to buying a car or a house, electronics are cheap, and those who scrimp on big purchases may still treat themselves or their children to an iPod. Circuit City filed for bankruptcy protection earlier in the month, which may have steered some prospective buyers to rivals.
At Best Buy, one of the "doorbuster" deals for early birds was for a 50 inch flat panel TV from Panasonic Corp. for $900. The manufacturer slashed its annual profit forecast by 90 percent on Friday, blaming a strong yen, sluggish sales and heavy discounting. Best Buy was also selling a 32 inch flat panel TV, the most popular size, for $400. Analysts at NPD Group noted that looking over a few decades, the average price for a TV in the U.S. has been just over $300, and flat panels could reach that level this holiday season, finally cementing them as the mainstream replacement for the cathode-ray tube. Manufacturers have increased their production capacity for flat panels this year, just as consumer spending is tanking, which should lead to further price cuts as the season goes on. TV manufacturers have one reason to be hopeful, sales of new TVs may be bolstered by the impending shutdown of the analog broadcasting network in February, which means that older TVs that use regular antennas will need to be replaced or use a box that converts the signal.
More generally, the decline in gas prices may be raising consumers' willingness to spend up from the absolute bottom!