The Consumer Electronics Stores industry felt the full weight of the economic downturn, as consumer confidence plummeted and customer traffic dropped as Americans held off buying big-ticket items like TVs and stereos. While growth will be modest in the coming years, revenue is anticipated to pick up as the economy bounces back. As disposable incomes revive and business sentiment picks up, consumers will demand electronics once again. Innovative technologies, such as 3-D and LED TVs, will held drive growth as consumers upgrade their current electronics and seek out the latest gadgets. For these reasons, industry research firm IBISWorld has added a report on the Consumer Electronics Stores industry to its growing industry report collection.
Los Angeles, CA (PRWEB) May 13, 2012
Consumer electronics and appliances are staples in the lives of modern consumers. “From DVD players to refrigerators, the American household is awash with electronics that perform a plethora of tasks,” says industry analyst Justin Waterman. Prior to the recession, the Consumer Electronics Stores industry benefited from increasing household wealth and falling product prices. However, the collapse of the US housing market, the subprime mortgage crises and the subsequent recession dealt a blow to the industry near the end of 2008. Unemployment reached near-historic levels and household wealth declined. As such, consumer confidence fell to an abysmal level, decreasing demand significantly in 2009. The demise of former major player Circuit City illustrates how reduced demand has impacted industry. In light of these conditions, IBISWorld estimates that revenue will fall at an average annual rate of 2.6% to $80.9 billion over the five years to 2012.
In addition to falling sales, rising competition with retailers outside of the Consumer Electronics Stores industry has initiated price battles among companies over the five-year period. “In order to drive consumer traffic, many consumer electronics stores have been forced to lower their price markups on merchandise,” Waterman says. As a result, industry profitability has declined. With falling margins, many underperforming firms have exited; IBISWorld estimates that the number of enterprises has declined 1.9% per year on average over the past five years to roughly 39,354 businesses. Current major companies include Best Buy Co. and RadioShack Corp. Because of Circuit City’s exit, these companies earned a greater share of the industry and overall market share concentration has been slightly diluted.
Through 2017, the projected economic recovery that will underpin renewed consumer spending is expected to spur the industry’s comeback. While spending is not expected to immediately reach prerecession fervor levels, renewed confidence in the economy is expected to drive retail sales. In fact, the industry has already shown signs of recovery; revenue is estimated to bounce back in 2012 as spending conditions improve. Demand for electronics accessories and peripherals is projected to rebound even quicker because these items are relatively inexpensive and can enhance existing technology. Demand for advanced products, including Blu-ray players, light-emitting diode (LED) TVs, 3-D TVs and smartphones, will also likely drive growth. For more information, visit IBISWorld’s Consumer Electronics Stores in the US industry report page.
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IBISWorld industry Report Key Topics
Consumer electronics stores retail a broad range of appliances, electrical goods and home entertainment products, such as TVs, DVD players and stereo systems. Goods are purchased from domestic and international (in some cases) manufacturers and wholesalers. Operators then retail goods to the general public through their storefronts. New purchases dominate the market, while the replacement market represents a smaller portion of sales.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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