US Markets embrace gadgets

The gloom and doom of the US consumer market may be the headline hitter of the moment, but despite the apparent oncoming recession the popularity of electronic goods and gadgets shows no sign of slowing.

The demand for new gadgets is reflected in an annualised increase in sales of 4.8 percent in July, a figure taken from government estimates, while the home furnishings and furniture market registered a decline of a similar amount and clothing sales dropped by just under one percent.

Coca Cola sales down

With the likes of Coca Cola – sales of 12oz bottles from petrol stations are 12 percent down as the cut back on driving continues – and Procter and Gamble, who have seen a reduction in sales as consumers opt for cheaper brands, feel the pinch, many electronic goods retailers are recognising the market trend and capitalising on it to good effect.

Wal-Mart, however, reports steady sales of flat screen televisions, and strong trading in both digital music players and personal computers. Also going against the grain is the amazing demand for the new Apple 3g iPhone that, despite reported problems with reception, has people queuing in hundreds outside Apple stores in order to buy the $300 dollar handset.

Amazon reap rewards

Shares in online retailer Amazon have rocketed of late, with a popular item being an electronic book reader that retails at over $350, and the company is freely promoting the purchase of electronic goods in the face of consumers abandoning the traditional and currently very expensive vacation.

Computer games retailer Gamestop is looking at an increase in sales of between 12 and 14 per4cent for stores open at least a year, that forecast being for the current quarter, and has seen the impact of the current economic downturn in customers trading in older games to raise funds for the new to the market titles.

Wish to be mobile

NPD Group analyst Stephen Baker, a specialist in consumer electronics sales, points to flat screen television sales as being particularly buoyant thanks to their featuring HD programming ability and a current downtrend in costs, while the ongoing wish of consumers to be mobile is helping boost sales in notebook computers and mobile communication devices.

Baker is quick to warn, however, that there is still cause for concern in the electronics business as the sector overall feels the squeeze of the economic back-pedalling, and that it would be a mistake for investors to believe the industry able to ride the downturn without significant problems. With sales growth of less than 5 percent, he points out that the industry still has great cause for concern.