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Dec 11, 2015

Black Friday, Glass Half…Empty!

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It’s that time of year again, the time when I wait anxiously for the results of the first holiday season promotional event in the Consumer Electronics industry, which for the purposes of this discussion includes the Audio, Video, Digital Imaging and Telecommunications sectors (excluding mobile phones).For context, Black Friday has historically proven to be a strong sales week for the industry with revenue growth of +27% in 2013, and growing again in 2014, but to lesser degree of +5%. It never fails though, the anecdotal stories that I hear during the waiting period, those that range from gloom and doom to blockbuster traffic and sales. Well, I refuse to listen to the anecdotes. I need evidence – show me the data!

It’s no secret that the 2015 sales trend over the past 12 weeks leading into the holidays has been challenging across many of the key CE categories.  The optimist in me hoped that consumers were waiting patiently for great Black Friday deals, something that the industry, for better or for worse, has trained them to do. And while the sales trend did improve for the week of Black Friday, the best I can say is that the declines were not quite as severe compared to the year thus far as total units for the Black Friday week declined by -9% and revenue declined by -5%.

Taking a deeper dive into the various CE key categories, televisions, by far the largest, declined by -7% on units, however the average selling price climbed by +5% as the market shifted away from 32” displays (-15%) and toward 55” displays (+14%), while 4K/UHD resolution TVs nearly doubled in size versus last year and accounted for 35% of the total category revenue.  Streaming audio speakers were hot during Black Friday growing by +34% and the growth of the stereo headphone category continued unabated although to a somewhat lesser degree with units up +3%.  Unfortunately, the Sound Bar category did see a sharp drop off for the week as units declined by -22%.  Finally, the camera category saw double-digit unit contraction across all of the key formats:  point & shoot, DSLR and mirror-less.  Notably though, as the low-end of these markets continue to erode, the average selling prices across all three formats rose significantly.

While promotional noise is routine – and expected at this time of the year in an effort to drive traffic through the door – I personally did not see the need for deep discounting this Black Friday.  Remember that the origins of this event in Canada were based on the objective of incenting consumers to stay north of the border.  For many categories though, after factoring in exchange the better deals are to be had in Canada, without having to slash prices even further.  And now, as the anxious waiting starts again for Cyber Monday and Boxing week sales results, here’s to a far more positive, and profitable, close to the year.

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