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Consumer Electronics Market Research & Business Solutions

In home, the car, and the office – consumer electronics are used everywhere, all the time. The devices consumers use are changing rapidly, as are consumers’ preferences. The features they want are converging. And it’s all happening in the midst of some of the highest device-ownership levels we’ve ever seen. To top it off, this is occurring in a mature market.

How do you make sense of it all and drive growth for your business? NPD has been tracking and analyzing trends in the consumer electronics market for more than 25 years, offering both retail and consumer information for all channels, including the Web. You can use this information to understand the rapidly-evolving product landscape and consumer electronics trends at the national and local market levels.

Beyond market measurement, we combine our robust data assets and industry expertise -- including your own data or third-party data, as needed -- to address specific issues at each phase of your business cycle from opportunity identification to marketing evaluation and pricing optimization.


Products


Retail Tracking

The Retail Tracking Service monitors retail sales of consumer technology products. Data provided by our participating channel partners delivers a detailed picture of product movement down to the item level. National information is available weekly and monthly; local market information is available monthly.

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Store-Level Enabled Retail Tracking

Store-Level Enabled Retail Tracking complements our national Retail Tracking Service– it can help you determine whether sales are distribution-driven or whether certain parts of the country are contributing more to national share or driving growth. The velocity measure set that is part of Store-Level Enabled Retail Tracking takes into consideration sales volume (Annualized Industry Volume or AIV) rather than considering store count alone, for a more meaningful read on where products are selling and how they are performing.

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Account Level Reports

These reports enable retailers who choose this option to share their information with approved vendors, allowing vendors to analyze business performance at specific retailers down to the item level in many instances. By making this report available to their vendors, retailers can work together with them to optimize performance. These reports may only be made available with the express permission of the retailer.

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Consumer Tracking

Explore comprehensive market research on consumer behavior and attitudes across a wide array of industry sectors. This service provides a total market view, encompassing activity at all retailers including Walmart. It delivers critical insights into market trends, demographics, and customer satisfaction to help companies address the challenges of market sizing, competitive analysis and response, new product development, product positioning, and more.

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Shopping Activity Services

Get access to insights on shopping, browsing, and buying visits across all channels, retailers, categories, and demographics. View conversion rate and average spend measures and see how they vary by retailer, season, and demographic. Gain an understanding of where else your customer is shopping and buying.

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Checkout Tracking

Checkout Tracking℠ provides information on consumer buying behavior at the market basket level, based on receipts for brick-and-mortar retail purchases. You get precise, item-level purchase detail that is linked to buyers and their demographics. Data comes from large-scale longitudinal panels, making it possible to study the same consumers over time, analyze competitive market baskets, and identify purchase patterns.

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Solutions


You have opportunities. You face threats. What you need are smart, quantifiable methods of distinguishing one from the other and maximizing your chances of success.  NPD’s Solutions Group includes a team of senior leaders with extensive experience developing and delivering analytic solutions that address strategic marketing, sales, and planning issues.

We combine NPD POS and consumer information, industry expertise, and custom survey research… then add state of the discipline research techniques and methodologies to explain the “why behind the buy”.  Through advanced modeling and analytic services, we offer insight into what will happen in the future, not just what has happened in the past, answering your most pressing business questions:

See how clients have used our solutions to solve their business challenges in our Solutions Case Study Library.


Reports


June 14, 2016

Tech Talks

This time, our Market Intelligence team focuses on Bluetooth headsets. Where is consumers’ affinity strong? Where are your most promising opportunities?

The newly formed Technology Market Intelligence team is committed to providing actionable intelligence that helps you understand what's driving shifts and trends in your key categories. Through email communications called Tech Talks and Technology Topline, now we'll provide added insights in the categories that matter most to you. The Market Intelligence team will complement our current industry analyst program by focusing on more tactical strategies that are being deployed effectively in the U.S. channel.

Check out the first edition of Tech Talks, our new communication highlighting the latest insights about what is driving the shifts and trends in the industry.

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February 12, 2015

Store-Level Enabled Retail Tracking Services

Store-Level Enabled retail tracking delivers unmatched POS information to help manufacturers partner with retailers, identify growth opportunities.

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January 19, 2015

Taking Stock: Tablet Accessories in U.S. Households

The tablet market is beginning to mature after explosive growth following the device’s introduction. The tablet is now an integral part of the typical American household’s electronics inventory. Our new Tablet Accessory Inventory Report evaluates tablet accessory purchasing and ownership, providing fresh insights straight from consumers and our industry analysts.

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January 19, 2015

It’s a Battle of the Screens

Our new report, The Battle of the Screens in Canada, pinpoints how your company can defend its position and advance on competitors. This just-released resource delivers extensive insight into consumer attitudes toward device usage and expectations about future usage. Discover exactly what’s happening as a result of screen fragmentation. Find out where your best opportunities exist.

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September 5, 2014

Kids and Consumer Electronics

Kids and Consumer Electronics, 2014 Edition delivers new insight on the significant role consumer electronics products play in children’s lives — and how it’s changing, with trended insights back to 2011. Looking at ownership and usage among kids ages 4 to 14, the report covers of a host of consumer electronics products — from smartphones and tablets to gaming consoles and TVs. Discover the frequency with which kids use these devices, the average age they begin using them, and more.

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February 25, 2014

Consumer Technology Reports

What's Driving Consumer Behavior?

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Press Releases


June 13, 2016

Activity Trackers Continue to Lead in Fitness Tracking, Despite Smartwatches Working to Close the Gap

Seventy-nine percent of activity tracker users exercise on a regular basis, compared to 66 percent of smartwatch users, according to NPD Connected Intelligence Port Washington, NY, June 13, 2016 – While activity tracker sales continue unabated, the smartwatch is becoming increasingly popular with c While activity tracker sales continue unabated, the smartwatch is becoming increasingly popular with consumers looking to monitor more advanced activities, according to The NPD Group Connected Intelligence Activity Trackers and Sports Report.

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June 1, 2016

Increasing Consumer Interest and Awareness Accompany 4K TV Sales Growth

Consumer demand for 4K streaming video services will be quick to follow with one in five consumers already expressing interest, according to NPD Connected Intelligence Port Washington, New York, June 1, 2016 – Despite adoption of 4K Ultra-High Definition (UHD) TVs only beginning to ramp up in 2 Despite adoption of 4K Ultra-High Definition (UHD) TVs only beginning to ramp up in 2015, over half (52 percent) of individuals surveyed said they were aware of these products, according to The NPD Group Connected Intelligence Connected Home Entertainment Report.

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May 25, 2016

Year-Over-Year Drone Revenue Soars, According to NPD

Drone dollar sales for the past 12 months were three times higher than sales from prior year   Port Washington, NY, May 25, 2016 – In the past 12 months (ending April 2016), drone sales have grown 224 percent year-over-year to nearly $200 million, according to The NPD Group's Retail Tracking Se In the past 12 months (ending April 2016), drone sales have grown 224 percent year-over-year to nearly $200 million, according to The NPD Group's Retail Tracking Service. Over the past six months (ending April 2016), sales growth has accelerated to more than four times higher than the same time period last year*. The following brands are leading the industry in drone sales:

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May 5, 2016

Year-Over-Year Connected Digital Fitness Device Growth Continues with a 40 Percent Dollar Increase in the First Quarter of 2016, According to NPD

Port Washington, NY, May 5, 2016 – According to global information provider, The NPD Group, the connected digital fitness device category has continued to see growth in the first quarter of 2016 (January – March) as dollar and unit sales of the devices grew 40 percent and 27 percent, respectivel According to global information provider, The NPD Group, the connected digital fitness device category has continued to see growth in the first quarter of 2016 (January – March) as dollar and unit sales of the devices grew 40 percent and 27 percent, respectively, versus Q1 2015*.

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May 3, 2016

Consumers’ Desire for a Single Digital Library Grows As Shoppers Continue Buying in Multiple Places

Port Washington, NY, May 3, 2016 – As buying digital movies and TV episodes becomes more common, The NPD Group’s latest Digital Video Acquisition Monitor (UltraViolet) report shows a growing interest in having digital content in one place. Two out of three digital video buyers feel that storing As buying digital movies and TV episodes becomes more common, The NPD Group’s latest Digital Video Acquisition Monitor (UltraViolet) report shows a growing interest in having digital content in one place.

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March 29, 2016

52 Percent of Millennial Smartphone Owners Use their Device for Video Calling, According to The NPD Group

Port Washington, NY, March 29, 2016 –As consumer preferences and habits for smartphone usage continue to shift, Millennials are driving the increased usage of video calling as a preferred application among smartphone users. In fact, according to The NPD Group’s Connected Intelligence Application As consumer preferences and habits for smartphone usage continue to shift, Millennials are driving the increased usage of video calling as a preferred application among smartphone users. In fact, according to The NPD Group’s Connected Intelligence Application and Convergence Report, more than half (52%) of smartphone users age 18-34 say they now use their smartphones to conduct video calls, representing an increase of 10 points year-over-year.

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March 22, 2016

Smartphones and Voice Commands Vie for Control over the Rapidly Growing Smart Home Market, According to The NPD Group

Home Automation Sales Up 41 Percent Year-over-Year in 2015  Port Washington, NY, March 22, 2016 – As the desire to create intuitive home spaces continues to increase, so too do the opportunities for devices and technologies to gain share in the smart home market. According to The NPD Group Connecte As the desire to create intuitive home spaces continues to increase, so too do the opportunities for devices and technologies to gain share in the smart home market. According to The NPD Group Connected Intelligence Connected Home Automation Report, nearly two-thirds (64 percent) of smart home product owners used a smartphone to control or monitor their home automation devices. Additionally, 73 percent of smart home owners already use voice commands, with 61 percent of those consumers expressing an interest in wanting to use voice to control more products in their homes.

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March 21, 2016

Over 80% of Smartphone Users Now Stream Video on Their Devices, According to The NPD Group

Video Content Consumption Driven by Younger Consumers Port Washington, NY, March 21, 2016 – Eighty-one percent of all U.S. smartphone users now stream video on their devices, according to recently released data from The NPD Group’s Connected Intelligence Smartphone and Tablet Usage Report. This usa Eighty-one percent of all U.S. smartphone users now stream video on their devices, according to recently released data from The NPD Group’s Connected Intelligence Smartphone and Tablet Usage Report. This usage is being driven primarily by users who are 25 and younger, who spend twice as much time watching video content on YouTube and Netflix mobile apps compared to users who are over the age of 25.

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March 7, 2016

49 Million U.S. Internet Homes Now Own a Connected TV or Attached Content Device, According to The NPD Group

As Streaming Video Content Surges, U.S. Connected TV Household Penetration Increases 14% Year-Over-Year Port Washington, NY, March 7, 2016 – More than half (52%) of all U.S. Internet homes have at least one TV connected to the Internet, representing an increase of six million homes over the past ye More than half (52%) of all U.S. Internet homes have at least one TV connected to the Internet, representing an increase of six million homes over the past year, according to The NPD Group Connected Intelligence Connected Home Entertainment Report.

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February 1, 2016

Year-Over-Year Wearables Spending Doubles, According to NPD

Port Washington, NY, February 1, 2016 – According to global information provider, The NPD Group, annual 2015 dollar and unit sales of connected activity trackers experienced respective growth of 110 percent and 85 percent versus 2014, despite the average selling price (ASP) increasing from $96 to $1 According to global information provider, The NPD Group, annual 2015 dollar and unit sales of connected activity trackers experienced respective growth of 110 percent and 85 percent versus 2014, despite the average selling price (ASP) increasing from $96 to $109.

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Insights


June 2, 2016

Tech Talks

In this edition of Tech Talks, our Market Intelligence team focuses on Bluetooth headphones. With Apple’s next iPhone announcement approaching, rumors are swirling around the future of the 3.5mm headphone jack.

Where is consumers’ affinity strong? Where are your most promising opportunities?

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April 25, 2016

Do These Pants Make Me Look Vegan?

Wellness. The term is so ubiquitous nowadays that we rarely stop to think about it outside of the context of juicing, yoga, and expensive sweatpants. What does it actually mean to be well, and what does it mean to adopt a healthy lifestyle?

From spiralizers and coloring books, to burritos and boots that are sustainably-produced – consumers are buying all sorts of products to help them feel and look better. What else do they eat, buy, and wear to embody healthy living?

Read on for shopping trends in food, home, fitness, tech, fashion, beauty, and more industries. Discover what the top-growing retail categories have in common, how the wellness craze is playing out across different generations, and what it means for you as a manufacturer or retailer.

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March 3, 2016

Winning Millennials, Gen X, and Boomers With the Five Ws

Every journalist and student in America knows the so-called five Ws: who, what, when, where, and why. It turns out the same five Ws are also the most basic forms of consumer segmentation.

But relationships among the five Ws of shopping are a bit more complex than they are among the five Ws of writing. And the tales they tell are illuminating.

We shared online and brick-and-mortar, receipt-based data from our Checkout TrackingSM service with researchers from the Wharton School of The University of Pennsylvania. The study revealed the what and the why of consumer purchases are linked to the when of consumers’ lifestyles. In other words, when people have babies, they buy baby things. But the how and where of purchases are tied to who a consumer is by generation.

Even when the other four Ws are the same, it’s who we are – Boomer, Gen X, or Millennial – that makes all the difference.

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September 14, 2015

Cracking the Millennial Code: What Brands and Retailers Need to know

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August 10, 2015

Home Automation Market Trends - Solution specific products

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August 10, 2015

Home Automation Market Trends - Multi-functional tools

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August 10, 2015

Home Automation Market Trends - Remote Access and monitoring

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July 9, 2015

The Business Case for Comparing Apples to Oranges

If you spend enough time looking at enough data, you’ll realize that correlations tend to fall into three categories:

  1. 1. The obviously useful, i.e., you’re a pizza maker who has seen your share of the market fall as a new competitor’s share has risen.
  2. 2. The dubious, i.e, when trying to find a way to overcome that share decline, you discover a near perfect correlation between increases in mozzarella consumption and increases in the number of civil engineering doctorates.
  3. 3. The seemingly dubious but actually quite useful, i.e, you’re a pizza maker who finds that your customers prefer Android phones to iPhones.

Finding the business value in that last category is not an easy proposition, however. It requires a bit of imagination and a bit of commitment. You have to look beyond the immediate -- wow, that’s kind of cool! -- to see what it might mean for your business -- wait, I can use that!

So let’s look at the business cases for unusual correlations.

CNBC published an article recently that used data from The NPD Group to look at what consumers’ phone operating systems said about their food choices. That article generated a fair amount of attention across social media. You may have come across it yourself on Twitter, LinkedIn or elsewhere. If not, take a moment to read “What your smartphone says about your waistline” now.

As the article says, new Checkout Tracking℠ data from The NPD Group shows a slew of surprising links between food preferences and cellphones. Folks who carry iPhones are more likely to eat soup and drink smoothies. Android users over-index for roast beef sandwiches and pizza (which is not to say that those over-indexers overeat. Who are we to judge?)

The correlations also extend to restaurant preferences. IPhone users can be found at Panera; Android users are over at Hardee’s.

So if you work in the IT department at one of the restaurant chains mentioned in the CNBC article, you now know exactly which phone system to prioritize in your app development.

But if you work anywhere else, it may not be immediately apparent what the business uses of such cool correlations may be….until you look deeper.

Hidden in plain sight

Checkout Tracking data is based on the millions of receipts sent to us and our technology partner, Slice Intelligence, by consumers. Those receipts yield detailed, item-level data about individual consumers across stores, across all retail segments, covering both online and brick and mortar, and over time.

Just think about that for a second: transaction-level detail across all retailers, across all channels and all time, at the individual buyer level.

Checkout Tracking can tell retailers what their most loyal customers do after they left their store. It can tell manufacturers what else customers bought when they picked up their product at a retailer. So let’s look at just a few of the less-than-obvious applications.

  • If you know what products customers bundle together at checkout, you can maximize the value of each customer visit
  • If you can see what percentage of your customers’ wallets are captured by others, you can determine your true competitive set and develop plans to boost your share of wallet
  • If you can learn what’s really lifting sales (penetration? frequency? purchase size?) you can spend your marketing dollars where they’ll count

Checkout Tracking yields loads of such fascinating correlations and less-than-obvious business applications. In addition to food, NPD tracks 20 other industries, including games. Here are a few correlations from the uber-hot category of Millennial gamers:

  • Male Millennial mobile games buyers spend more of their dollars on Uber and Apple.com. They also spend more online dollars on Travel and Movies and TV.
  • Female Millennial mobile games buyers spend more of their dollars on Groupon. And they spend more online dollars on pet supplies and online deals.

Data like that suggests, for example, that the best way to reach female gamers may be through online deal sites. Or if you own a pet store, you may want to consider in-game advertising.

If you’d like to know more about how Checkout Tracking would work for your business, fill out the form to the right.

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June 15, 2015

Talking Shop

E-commerce is growing in the fashion and beauty world. Last year, 23 percent of footwear sales, 20 percent of accessory sales, 16 percent of apparel sales, and 11 percent of U.S. beauty sales took place online. And these rates have continued on an upward trajectory.

With that said, online retailers still have a long way to go in converting brick-and-mortar consumers to full-time Web shoppers.

To mitigate the risk of online shopping and win over naysayers, a handful of companies have developed advanced technologies that make shopping online more informative and lifelike. Armed with virtual mirrors, 3D body scanners, haptic devices, and 3D headsets, these retail visionaries are doing a pretty remarkable job of emulating the in-person experience so that shoppers can virtually see, feel, and try on products.

But who needs all those fancy bells and whistles when you’ve got people?

Some  companies have passed up virtual avatars and simulators in favor of social networking solutions that work off the collective power of many users.

Enter social shopping.

You wouldn’t buy a skirt without asking your friends  . . .
Online community-based e-commerce sites have taken the concept of asking a friend where she got that great skirt to the Web. Now you can use social media channels like Pinterest and Instagram to follow the activity of brands, designers, and friends whose style you identify with. By following only the profiles you care about, you can curate your own personalized feed and easily click to purchase.

This powered-by-people concept applies to shopping on most retailer sites these days. Whether on Amazon, Zappos, Anthropologie, or any modern retail site, you can use the product comments section to gauge how an item might fit you. See some posts by men who also wear a size 9 complaining that a dress shoe model runs large, and you might opt for a half size down. See a flurry of posts about a sweater pilling after a few wears, and you’ll probably pass. And even if you don’t personally know any of these anonymous posters scattered around the globe, there’s something reassuring about seeing past customers rave about an expensive dress. I guess you just have to have it, then—public opinion supports the decision.

If the shoe fits
Customer comments and trend setters are cool and all, but it still takes time to sift through shoppers’ comments. And it can be a real downer to follow a fashion icon whose body type is so unlike yours that you can’t even begin to imagine pulling off the romper she professionally shot on her Instagram feed. But take the social network concept one step further by adding big data—and now you’re talking!

Tech startup Fitbay connects shoppers of similar body shapes to help share fitted styles, marketed as “a fun way to see what real people like you are wearing.” When you create an account, you enter your general body measurements (height, weight, long vs. short torso, etc.) and the website matches you with real-life "body doubles" who share your figure characteristics. You can follow their posted photos and comments on how specific items fit their bodies to discover the stores, brands, and clothes that are right for your body. So not only can you track the styles you like—but the styles that work for your body doubles.

In a similar vein, retail software company True Fit aims to help consumers buy more and return less by showing them how clothes and shoes viewed on screen will fit in real life. The technology firm collects brand, consumer, and retailer data on apparel and footwear. Users share favorite styles, rate previous purchases, and update their profiles; this activity generates billions of data points on how brands and styles fit shoppers of different body types. True Fit then makes fit and size recommendations for each individual shopper. The company explains that, “the more you shop using True Fit, the smarter it gets at fitting you.” With a network of 2,000+ retail partners like Kate Spade, Macy’s, Uniqlo, and Footlocker, you can record how one pair of shoes fits you and immediately get recommendations of other brand models that promise to fit like a glove.

Power to the people
People-powered social networks are making online shopping better and easier for consumers. It’s much more efficient to browse apparel styles and brands that work for your body type rather than sifting through high-fashion glamor shots of models donning threads that only a fraction of the population can actually pull off.

Social shopping networks help retailers and brands, too, by providing data that enables more informed merchandising and marketing decisions. And they offer an advantage over 3D scanners and virtual dressing rooms by mitigating the barrier to entry for retail companies. (It’s easier to opt into an app than it is to install body scanners at storefront locations or develop content for 3D goggles.)

Interested in how other innovators are changing the retail landscape with back-to-the-future-like technologies? 
Check out this in-depth review of how smart mirrors, VR headsets and other technology are altering retail.

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May 28, 2015

Facing (Virtual) Reality

How smart mirrors, VR headsets, and other tech will alter retail

Pretty soon the lines between physical and digital reality will be blurred.

You’ll be able to sit in your living room, put on some 3D goggles, and shop for a pair of jeans in a virtual store — that does not physically exist.

Or, if that’s too Matrix for your style, you can use your mobile device to see how a pair of jeans fits your virtual “avatar” and even feel the texture of the jeans through the vibrations of your phone.

What if you have some time to (or better yet, what if you want to) stop by an actual store in person? Then you’ll simply peruse a rack of jeans as information on pricing, deals, and customer reviews appears before your eyes on an optical head-mounted display.

The fashion and beauty landscape is evolving as retailers of all types look for creative ways to offer consumers more efficient, reliable, per­sonalized, and enjoyable shopping experiences. What do these Back-to-the-Future-like solutions mean for the retail industry?

Which technologies truly add value to the store experience, whether online or offline?

Which retailers get it?

Digital gets physical

E-commerce boasts a two-decade tenure of advancing the shopping experience by enabling consumers to browse, research, and compare products from anywhere, any time.

And consumers are into it.

The proof is in the data. Both the number of online buying visits and dollar sales have climbed steadily since 2012. In the 12 months ending in March 2015, U.S. consumers made nearly 5.2 billion online buying visits. They collectively spent $358 billion, shown by The NPD Group’s Shopping Activity Services. And this trend is poised to continue on the same track.

U.S. Brick & Mortar visits are on decline while online visits are on rise

The total U.S. market is up 2% for the 12 months ending March 2015, driven by double digit increases in online sales.

For softline products specifically, penetration in the U.S. online market has been on a steady ascent since 2011. Last year, 23 percent of footwear sales, 20 percent of accessory sales, 16 percent of apparel sales, and 11 percent of beauty sales took place online.

Online retailing, however, is not without its limitations.

E-commerce penetration rates have generally been lower for softlines than for hardlines. And this isn’t surprising, since beauty and fashion are emotive.

In this space reaching a purchase decision is not only about how something looks on a screen, but rather, how it looks on each of our unique bodies, and how it makes us feel.

Sure, you can browse product photos and study customer reviews to reach an informed decision — but what about the tangible components? How can we know in advance if a pair of pants will fit well around the waist, but gather awkwardly around the hips? Or if a dress that is knee length on a six-foot model will fall well below the knees on our shorter frames? Or if for some inexplicable reason something just doesn’t work?

Enter augmented reality — and a little bit of virtual reality.

Augmented reality links the real and virtual, enhancing our world view by providing a different perspective with the help of digital technology, usually some type of screen or lens. It is partly immersive, allowing users to see through or around it. (Think Google Glass.)

Virtual reality technologies take it one step further — creating a completely immersive experience through computer generation, transporting users to “closed” virtual universes. (Think 3D goggles that shut out the physical world around you.)

Magic mirror on the wall

On the augmented reality front, footwear and accessory retailers Warby Parker, Converse, and the like have rolled out digital tools that allow users to virtually try on merchandise. In Warby Parker’s “Virtual Try-On” tool, it works like this: you select a pair of glasses from the site, upload your headshot, and the tool overlays an image of the frames over your photo, providing a general idea of how the glasses might look on your real face.

Likewise, Converse launched its Converse Sampler iPhone App a few years ago. You scroll through photos of sneakers within the app, virtually position them over your feet with your phone camera, assess how they look, and order a pair directly through the app.

Makeup manufacturers have joined the virtual bandwagon, too. With YOY U.S. sales growth of $262 million in 2014, makeup is enjoying healthy gains, and brands are rolling out solutions to test makeup away from the store. Avon, Mary Kay, and L’Oréal USA, for example, provide virtual makeover tools on their websites, allowing visitors to try out different face, eye, lip, and nail products virtually. While Avon and Mary Kay use simple photo upload tools to layer on makeup to headshots, L’Oréal USA’s Makeup Genius smartphone app creates a real-time mirror experience: you scan your face with a smartphone camera and try out “looks” while the camera is live, providing immediate feedback as you tilt and turn your face.

NPD Senior Makeup Industry Analyst Kissura Mondesir says we’re in the “age of the selfie”— with photo uploads, effects and filters all parts of everyday life. These “try before you buy” virtual makeup tools are a natural extension of our creative expression, and they are sure to be a big hit with Millennials.

These tools provide a better alternative to simply “winging it” online, and they’re certainly helpful (and not to mention — fun!) in narrowing down beauty and fashion items that don’t work for you. But let’s be honest. Do they really provide a revolutionary perspective that you can’t get from a little imagination? And they unfortunately cannot assess how an item fits or feels on you. Many online retailers like Amazon and Zappos have mitigated this risk with liberal return policies that make returns or exchanges free — but this isn’t always a price performer from the retailer’s perspective.

Karen Grant, NPD’s global beauty industry analyst, knows the space better than anyone else. She says the online space is the most dynamic in terms of prestige beauty product growth. But she prefaces this by saying that beauty is still a category where consumers thrive on touching and experimenting, so there remains a need for an in-store element and/or advisor.

Playing dress-up

What’s the best alternative to trying on clothes in person?

Trying them on your virtual avatar.

Using virtual body doubles for online shopping could one day become a mainstream reality, thanks to 3D scanners that create highly accurate models of the human body. These expensive scanners can exist in offline stores in the form of heavy-duty, advanced radio wave scanners, or

laser-based devices like Microsoft Kinect. Alternatively, consumers could enjoy direct scanner access via mobile device cameras or webcams, though these would produce less precise models.

Bloomingdales has experimented with Me-Ality technology, using body imaging machines to match consumers with their appropriate off-the-rack sizes. Men’s fashion brand Alton Lane takes it one step further by conducting in-person body scans at its showrooms and using these precise measurements to design and produce bespoke suits for its clientele. Armed with their virtual avatars, customers can then make future purchases on Alton Lane’s website and feel confident about fit.

Software company Styku is developing a platform that creates 3D models of both garments and shoppers, recommends sizing, and allows shoppers to see how clothing items would likely look on them (via their virtual avatars).

If retailers are willing to invest in and roll out this technology, body scanners will disrupt the apparel industry and open up the online market to risk-averse consumers otherwise skeptical of e-commerce.

Ya feel me?

In the long term, expect to see a cost-effective solution to e-commerce malaise in the form of haptic devices — technology that allows us to feel the texture of an online product through transmitted touch. Haptic devices recreate the sense of touch through tactile feedback by applying forces and vibrations to user devices. Imagine being able to swipe your finger across a tablet screen to feel smooth silk or coarse wool.

Many technology firms are developing systems they hope to one day roll out for commercial retail use—but in order to go mainstream, haptics need to spark device manufacturers’ interest. As of now they’ve garnered minimal interest due to a lack of compelling use cases, so consumers should not expect to see them on the market any time soon.

A rose by any other name . . .

We’ve discussed virtual sight, fi t, and feel—but what about virtual smell? Beauty and cosmetics brands are getting in on the virtual reality game, but are fragrance retailers also innovating in this space?

Tech companies have developed cell phone plugins that allow users to text the smells of “bacon” or “flowers” to friends for fun. If consumers are game for this, why wouldn’t they be interested in a similar application for fine fragrances? Imagine being able to shop online for perfume without a trip to the store, by sampling different trademarked scents through your mobile device? Or better yet, forgo your own perfume application, and just carry your phone around with you and let it emit the fragrance!

NPD Fragrance Industry Analyst Brenna Phelan warns that while consumers might be apt to embrace this virtual fragrance concept, the industry is not. Luxury fragrance brands succeed in part because of the high-quality ingredients and artistry of the perfumers — qualities that may not translate well through virtual smelling. The absence of this category on the virtual front is worth noting.

Beam me up, Scotty

As long as you’re trying clothes on your virtual avatar, you might as well extend the virtual reality and let your body double make a quick spin at the virtual store, too.

One firm at the forefront of developments in the virtual reality space is Oculus VR, acquired by Facebook for $2 billion in March 2014. The tech company is developing the Oculus Rift, a head-mounted 3D display for virtual reality. Though its primary application is for entertainment, film, and gaming, it also has relevance in retail. This technology would allow shoppers to benefit from any number of the fit technologies described above — except they would exist in a completely “closed” virtual world, through a 3D simulated environment. You could put on a headset in the comfort of your home and immerse yourself in an alternative shopping reality, browse and feel products, see how they look on your avatar, and make a direct purchase.

Though flashy and fun, this device won’t have real potential in the retail world until it is fully developed, and until software companies create the virtual worlds to live within it.

Physical gets digital

So just as e-commerce sites can use new technologies to become more human, traditional brick-and-mortar stores are trying to become more digital.

Retailers like Bloomingdales, Topshop, and Burberry have deployed augmented reality technology in their physical stores to allow shoppers to see how products look — without physically trying anything on. Bloomingdales and Topshop experimented with Microsoft Kinect to create 3D virtual dressing rooms; with the help of a motion-sensor, shoppers could wave their hands to scroll through different apparel items as the technology overlaid 3D clothing images over their real-time “reflections.”

On the beauty front, Burberry created a Digital Runway Nail Bar in one of its London stores, where customers can virtually test out new nail polish colors. By placing a nail polish bottle on the RFID-enabled platform, customers see the polish appear on the fingers of a virtual hand on a screen; they can then select a skin tone similar to their own to compare how different nail shades might look on their own fingers.

Panasonic recently debuted a “smart mirror” at the 2015 Consumer Electronics Show with the hopes of rolling it out to department stores. The mirror has an embedded camera that can scan and project an image of your face on top of your reflection, and enables you to try out different looks by applying digital makeup — and even facial hair!

Sounds similar to L’Oréal’s virtual makeover tool — except Panasonic’s mirror analyzes your face using high definition cameras, points out facial flaws (lines, age spots, etc.), and tells you which products can fix them.

The real deal?

Though certainly engaging and fun, these digital dressing rooms and mirrors don’t seem to provide greater insight than does holding up a real shirt against your real body, or applying actual makeup to your face. Though these technologies might be additive online, offline they seem a bit duplicative. And what’s more, they can’t really offer much insight into how something fits or feels. So while you may save time in the short term, you could wind up spending more time returning items later.

It might just be worth it to endure the dressing room queue.

And as for a smart mirror that points out your flaws? Would you want a computer to point out the bags under your eyes and project them onto a public screen?

What works

Retailers from Walmart to Target are experimenting with 3D computer simulations and other technologies to enhance the real-world shopping experience. The ones who seem to get it are those who have found a way to extend the perks of online shopping to the physical store. Here are some examples of what’s working:

  • Sephora and Pantone teamed up to create Color IQ, an in-store digital beauty device that scans the surface of your skin, assigns it a “Color IQ”, and then matches you with the right foundation color from over 1,500 product options.
  • The software company Zugara has developed a technology that allows shoppers to try on one apparel item and digitally view what it looks like in different colors and styles.
  • American Apparel rolled out an application that lets patrons scan items via mobile device to get more information on products, see floor items in different colors, and read reviews by other customers.
  • Israeli mobile app Zikit pushes mobile coupons and offers from retailers to shoppers who walk into stores, providing retailers with behavioral insights on individual shoppers. This eventually allows stores to tailor personalized suggestions to these customers after repeated app use.

If the above technologies one day go mainstream, retailers could learn to know us and our shopping preferences, and never again will we become lost in a store!

Two worlds at the same time

Some brands are putting shoppers into a completely immersive digital world, turning to virtual reality for branding endeavors.

Topshop, for example, gave its fans a seemingly front-row view of a fashion show during London Fashion Week: store visitors were virtually transported to the catwalk with a pair of goggles (while stationary).

North Face employed a similar virtual initiative to elevate its in-store experience and brand storytelling. The outdoor product company transported in-store customers to Yosemite National Park and Moab Desert via Google Cardboard in partnership with technology firm Jaunt. In between shopping at flagship store locations, customers could virtually rock climb and trek the landscapes with famous athletes.

The future is now

So here’s the thing: these new technologies offer competitive advantages of one type or another to everyone. In-store shopping could become more fun. Online shopping could become more real. Consumers who can’t find clothes that fit will find clothes that fit. Even the most tactile and sensory of shopping experiences could move online, and the most dramatic and dangerous of real-world experiences could be enjoyed in the safety of a virtual environment.

Brands like North Face and Topshop, Sephora and American Apparel, Panasonic, Bloomingdales, Burberry, and more are all investing in these new technologies because they know you don’t need a VR headset to see the future. You just have to face it.

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Insights and Opinions from our Analysts and Experts


June 6, 2016

Ode to the Flip Phone?

I remember getting my first cell phone like it was yesterday. It was my 15 th birthday and the phone I was thrilled to receive was dumb, heavy and oh so cool all at the same time. I could make phone calls, text (by triple-tapping the numeric keypad) and play the one pre-installed game – Snake.  Thirteen years later, I’ve had my share of ever-evolving phones from the Motorola Razr, to the very first iPhone, and so on. I have games galore, messaging apps and yes, I can still make the occasional phone call.

But is it any more exciting, or even as “cool” as I used to think it was? Smartphones seem to have peaked, with longer life-spans and slower sales, as there seems to be less and less to differentiate the old from the new. In other words, we’ve hit a level of maturity and with it, a tinge of dullness. This has resulted in the murmuring of a retro vibe: hipsters now sneer at smartphones, opting instead for flip phones. And a new “Motorola” ad suggests the Razr may be brought back later this month… I hope so, if only to shake up the market.

Not that I want to regress to the flip phone of my past, but we need a new take on the smartphone market; a new niche or “wow factor” to recapture user interest and justify expense. After all, the average cost of a smartphone is around $500 and can quickly head far higher than that, now that subsidies are (almost) a thing of the past. Simply put, the current design focus of “bigger, faster, lighter” is, in many ways, the enemy of true innovation and is limiting the appeal of the latest generation of devices. How fast do I really need a phone to be? Can I make mine last longer if it’s still running the apps without the processor choking?

One approach that is teetering on the edge of emergence is that of a modular smartphone. Conceptually the idea of modular smartphones is great: when your battery level is critically low, just pop in a new one (of course, my original flip phone could do that too…). Want a better picture? Snap in the higher megapixel lens. Broke the screen again? Click in a new one and be on your way. However, with this flexibility also comes a lot of responsibility. Where do we keep the many auxiliary pieces? Do we drag them around with us at all times? Or does it come down to dressing up our phone for the day ahead before walking out the door in the morning - not a bad idea in concept, but I’m not convinced that we will still be “dressing” the phone after the first week.

Time will be the only indicator of whether or not this concept will take a foothold in the market. Until then, the one main feature I would like to see come out of the mobile world in the next year is a smartphone with longer battery life. Forget “bigger, faster, lighter”; give me “longer.” But ideally, give me that with a cooler outer shell. Something that shouts that it is different in the way the original Razr did. Maybe Motorola is on to something…


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June 3, 2016

The Changing Computing Landscape

Last week I read an excellent post from our own Industry Analyst, Steve Baker, talking about the Computing market south of the border.  He spoke of a changing Computing landscape, the decline of the Tablet market and how what we view as a Computing device is much different than many years ago.  I couldn’t agree with him more as the Canadian market is experiencing a similar trend however as I read through his post I couldn’t help but compare some of the US trends to our own business and making note of some of the key differences.

Yes through the first four months of 2016 the combined Tablet and Notebook market is showing similar volume decline, around 16%, and just like the US market it is the Slate Tablet that is driving the majority of this decline.  Traditional Notebooks, like in the US, are faring better with unit volume down 7% while at the same time generating more revenue this year than the previous year.  After comparing those initial market comments I thought Canada and the US are following the same path however after reading further it became apparent that although at the highest level the markets seemed similar there are some key differences that make Canada distinct.

Steve talked about the sub $300 market in the US growing, now representing almost 40% of traditional Notebook sales, with low-cost Windows and Chromebook devices showing increase presence in the market.  Here in Canada this is not the case as we are dealing with a market where the low-end market has diminished significantly in importance.  Chromebooks within Canadian retail is a very small portion of the market overall, securing less than 2% of sales, while in general the “value” market represents less than 15% of Canadian sales and is in steep decline.  So far in 2016 we see not only this “value” market in decline but expanding that view to Notebooks priced at less than $600 and we continue to see both unit and revenue declines in these lower priced markets.  We know that higher prices being driven by a less than favorable exchange rate is impacting what consumers are being asked to spend however throughout the years I have always seen a Canadian market less dependent on lower price segments.

Similar to the US, here in Canada the Premium price market is showing tremendous growth, including the 2-in-1 market.  While in the US there is mention of high-end PC’s beginning at the $700 level here in Canada at $700 we are still thinking about mid-priced devices.  Our high-end or Premium market can be considered $1,000 plus for a device.  Within the Notebook market this Premium market represents 40% of the  volume and close to 60% of the revenue.  Which means we are asking Canadian consumers to shell out more of their hard earned dollars to purchase a premium priced device.  So far Canadians seem to have little issue opening up their wallets as this Premium market shows no sign of slowing down as they continue to purchase not only traditional Notebooks but also 2-in-1 devices at these high price levels.

So while on the surface it seems as if both regions are following the same path, as we look further into the Canadian market we discover some very unique nuances that can change how we market and sell our devices.  In this example the price difference is evident across borders – furthermore the competitive brand set and those who are leading or following is different as well.


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May 24, 2016

Looking at the Computing Market with a New Set of Eyes

The news today is full of doom and gloom about the future of the PC. Undoubtedly, there are plenty of challenges ahead for the category, but there is also plenty of room for optimism. While we celebrate so many things in tech that have been reimagined or disrupted we have given short shrift to the reinvention of the PC; in fact, we have given little notice to it at all. The numbers tell a great story of redemption and reinvention, but like all great tales that have to do with data, it is all in how you organize and interpret the data.

The consumer PC market isn’t dead. It looks a little different than it did in 2007, but the world looks different, too. While the business was slow to adjust, it’s now fair to say that it has adjusted, at least in the U.S. consumer market, which is where we focus. Using a modern, updated definition of a PC (and calling it a large screen computing device instead of a PC), the numbers don’t look like what some have come to expect.

For the first four months of 2016, unit volume of computing devices (tablets and notebooks) in U.S. retail fell 11 percent from the prior year. A weak showing for sure, but one tempered by the fact that the decline came solely from slate form factor tablets. The tablet market dropped by more than 30 percent as consumers either decided they didn’t need a new device or, when in the market for something, chose to step-up to the new hybrid 2inOne market. That decline represented a drop of over 1.2 million units in sales in just a four month period.

Traditional notebook PCs fared slightly better during this period, but still struggled as sales volumes fell by 7 percent versus the prior year. In the first four months of 2016, clamshell notebooks actually outsold plain vanilla slate tablets by nearly 1 million units. Notebook sales growth came from two segments - both very interesting for their representation of what the new reality of personal mobile computing has become. The leader in the segment was the entry-level notebook PC. Basic Chromebooks and low-cost Windows notebooks have taken the market by storm over the last couple of years. Sales for notebooks under $300 jumped 12 percent and now represent almost 40 percent of the traditional PC notebook market. The other growth area in traditional computing is high-end PCs. Sales for Windows notebooks above $700 grew by 10 percent during the first four months over the same period in 2015 (and exceeded the growth in Mac OS based notebooks); and at the end of the period they accounted for 18 percent of all high-end notebook sales - a new high for Windows.

At least some of the improvement in Windows can be attributed to the halo effect of the star segment in the personal mobile computing, which is the hybrid 2inOne. Sales in this segment, which includes products like the Yoga, Microsoft’s Surface products, and the iPad Pro, soared by 76 percent over the previous year and represented almost 20 percent of all mobile computing devices. This is the new face of personal computing: hybrid devices that are part tablet and part productivity tool. While the iPad Pro has been a runaway success, accounting for 18 percent of sales for the first four months of the year, it should be noted that the remainder of the market grew by more than 40 percent. That other segment was led by Microsoft’s Surface products, although they accounted for just 10 percent of hybrid sales with the remaining 70 percent made up of a mixture of traditional PC OEMs that now have an entree into a more compatible tablet like space that sits adjacent to the PC, and new low-cost providers like Nextbook.

Far from collapsing, a re-examination of the mobile computing market shows that while there are challenges, as there are for all consumer electronics devices in the highly-saturated U.S. CE marketplace, the mobile computing industry has successfully reinvented itself, propelled by a mixture of premium and entry-level traditional products, as well as a growing interest in the hybrid 2inOne space.

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May 18, 2016

Tale of a Cord Hugger

There is a perception that viewers are cutting the cord in droves, similar to the chopping down of Truffula trees to produce Thneeds. I, a tree hugger, am becoming a cord hugger, though a far cry from the Lorax of the cable industry. In this regard, my TV habits represent the majority as cord cutting is just starting to proliferate. This is my story; one about switching from Fiber Optic TV and re-subscribing to cable despite much consideration around cutting the cord.

The decision point arose when the two-year promo rate ended, ratcheting up the cable bill somewhere north of $200 a month. Do we need pay TV? Maybe a skinny bundle would be sufficient? Should I construct my own over-the-top bundle to replace a pay TV subscription? Would it include Sling TV, Netflix, HBO NOW, and Showtime? How much would Internet cost without the Triple Play discount? While it’s fairly easy to never plug in, cutting the cord can be quite an arduous task. Ultimately, cable provided the content our household wanted at a price that was unachievable with a la carte services. As an analyst covering digital video distribution, the evaluation process proved educational.

The first thought was to keep a pay TV subscription and lower the rate by dropping TV channels; simple, right? Not really. Skinny bundles, as they are more commonly called, are generally promo rates, and, for existing subscribers, no less expensive than the discount they were willing to extend for my existing TV package.

Option two was to cut the cord - and so began the process of determining what must be given up to go over the top. The idea was to make Sling TV the foundation. At $20 per month, with robust kids programming, this appeared to be a homerun. That is, until I realized it meant subscribing to two full-priced Sling services to get televised access to my last place NY Yankees and Disney channels. Sling just started offering YES Network, but as part of a beta package that does not include the Disney channels. Being a fan since the early 80s I wanted to stick with my team, which meant subscribing to the beta service and standard service to get the right channel mix. As is the case for many fans, access to in-market game day coverage throws a monkey wrench into the cord cutters dream. But this alone did not ensure coaxial cable kept running through the house. The real problem was that Sling does not authenticate all TV Everywhere apps. That’s a non-starter for the kids, who are more likely to use the Disney XD app than the linear channel.

And so, barely into the pursuit of a cut cord, the dream had fallen apart. I never made it to the math, but looking at the rates for Internet without TV, I doubt the over-the-top cocktail of services would have cost any less. While cord cutting and un-authenticated streaming apps are becoming more common, it still requires compromising content and services. Ultimately, the regional cable operator offered more channels than I had before, a faster Internet connection and a three-year rate lock at the price I was paying before my promo expired.

Back with cable only days after a two-year tour with Fiber optic TV, viewing changes are occurring. When you’ve had cable since the early 80s you know the channels and that means browsing is back. It remains to be seen how long this new found love for browsing lasts as frustration with the ads is already setting in. More importantly, in a couple of weeks a new season of Peaky Blinders will be available on Netflix, pulling us back in to the (sort of) cordless world. But only partially; the cable cord will remain part of our household.

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April 26, 2016

Hearables Take Headphones Well Beyond Music

In the past, consumers had pretty simple requirements for buying headphones – the sound needed to be good, but not great. We dealt with wires, clunky designs and foam covered ear cups as we listened to music at home or on the go. Today’s buying criteria are much different. Shoppers place a larger emphasis on sound quality, mobility and of course design. Headphones have become more specialized, aligned with different listening occasions like travel, gym and office use. In fact, many consumers own multiple pairs- 2.1 on average, according to NPD’s Headphone Ownership and Application Study. Features like Bluetooth, in-line mics, volume controls and moisture resistant materials have come to the forefront, adding convenience as well as a new element to the user experience. All of these factors have contributed to continued growth in the headphone market, which, according to The NPD Group’s Retail Tracking Service, grew 7 percent (units) in the 12 months ending in February.

But just as new features are making headphone use more convenient, a new crop of products are looking to add another dimension to personal listening. Enter the hearable. While not a great term in my opinion (it doesn’t really describe anything) hearables, similar to wearables, is technology for your ears. Music listening is a component of the experience, but not the entirety of it. The idea revolves around adding features to personal listening devices like headphones that can change what’s being heard, provide audible data or feedback of some sort, or result in a biological response from the user.

Don’t we just want headphones that will reliably play What Does the Fox Say?when we queue up the song on Spotify? Sure we do. But just as sensors, apps and constant internet connectivity have transformed the way we use mobile phones, the same could occur in audio listening devices. One of the best examples of hearables is Doppler Labs’ ‘Here’ wireless ear buds. Described as an active listening system, Here’s ear buds have microphones built-in allowing the wearer to alter the sound of their surroundings. A companion smartphone app offers settings that control what is heard through the ear buds, giving the user the ability to tune out a crying baby on a cross-country flight or turn up the low talker at dinner. Here doesn’t currently play music stored on a smartphone, but it can alter how live music is heard, allowing for control of elements like bass, reverb and flange. To test Here I recently used a preset in the app to make the acoustics of live music in a concert hall sound like that of Carnegie Hall.

Here’s main use case is unique among the early field of hearable devices, but other products are looking to use their positioning on and around the ears to add unique features as well. Sony’s Smart B Trainer headphones add a personal trainer to workouts providing real-time audible feedback and encouragement in addition to tracking runs and selecting a playlist based on the user’s active heart rate. The Bragi Dash, like Here, is a wireless ear bud that tracks and provides feedback on workouts in addition to playing music via a 4GB hard drive built-in to the earphones. And rumors continue to swirl around new wireless headphone products that will streamline access to popular personal assistant apps like Google Now and Siri, aiming to make it easier to execute web queries and other commands on-the-go without pulling out a phone.

Aside from new offerings, companies have also begun studying the biological response to audio stimuli through technology. Last fall, Skullcandy announced theHuman Potential Lab, an initiative aimed at understanding how audio input impacts the body’s physiology and psychology. An effort like this has obvious applications for athletes, but could also benefit the everyday headphone user. For instance, NPD’s research shows a third of owners wear their headphones at the office and 41 percent listen to headphones while traveling. Can a better understanding of how the body responds to different types of audio make an office worker more productive or a skittish flier calmer on a plane?

New features and technologies are changing the way consumers use headphones, providing growth to this mature product category. Buyers are still looking for great sound and sleek designs, but developments in the hearables space have helped demonstrate that headphones are capable of even more. New sensors, Bluetooth and Wi-Fi connectivity, and companion smartphone apps are helping to create a more versatile future for the category- one that will become even more important as other personal technology products like drones and virtual reality demonstrate the need for unique audio experiences. The term hearables may not ultimately endure, but it’s clear headphones are quickly becoming a launching pad for innovation.


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March 15, 2016

Me And My Smartphone, Till Dead Battery Do Us Part

It’s no secret that we all keep our smartphones close, and they are the most personal of personal devices that are available to us. Indeed, on average we interact with our phones 150 times in a given day, which means that if we assume that we all get a decent night’s sleep, we reach for our phones every six-to-seven minutes during the waking hours.

The very first reach for the phone often happens as soon as we wake up. About one-third of smartphone-toting consumers fall asleep with their phone nearby, reaching for it as soon as they wake up. Indeed, the phone is very much the third wheel in many relationships (and fourth, as it’s likely the other person in the bed also has their phone nearby). And while it could be interesting to see how these phones change the romantic dynamic, we’ll stay on safer ground and look at exactly what people are using their phones for first thing in the morning.


According to the Connected Intelligence Smartmeter, 12.5 percent of smartphone users check their in-box as soon as they reach for their phones in the morning (during the work week). Why do I find this surprising? Simply because social networks are the go-to service for personal updates, which means that a lot of the email checking is likely to be work related. So that suggests that 12.5 percent of smartphone users are pretty dedicated to their work email; and the number only drops down to 10.8 percent during the weekend, meaning that many of us need to get a bit more of a life outside work!

The second shocker for the morning regime is that placing or receiving a phone call is the second most popular activity. Six percent of smartphone owners take part in a good old-fashioned voice call first thing in the morning, which is more than particpate in a group chat or messaging app at this time of the day. Of course, the difference is that, on average, we make seven calls per day, spending just over 30 minutes chatting in total. By contrast, consumers spend almost double that in group chat apps, which is something I can personaly attest to. I seem to be constantly bouncing between five different OTT group chats, including a work chat group, family, various groups of friends, and a soccer group (at least this shows I have a work/life balance to counter the possibility that I’m checking email too early on a Sunday).

In between voice calling and group chats is music use, with just under six percent of the base listening to music first thing in the morning. Wrapping up the early morning list are navigation and weather apps as we prepare for the day ahead and the traffic congestion that we may face. Those apps make sense to me, because if the weather forecast is too gray, or the traffic congestion too grim, then perhaps I’ll just turn up the volume and listen to a few more tunes before making my move in the morning.

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March 14, 2016

When Watching TV No Longer Requires A TV

Two summers ago, my daughter Eleanor and I had a spirited back and forth about her favorite show, Peppa Pig. Basically, she wanted to watch the show through the Nick Jr mobile app, but our family iPad was already being used and our other devices didn’t have any power. I suggested we try and find it on the living room TV instead. Surprisingly, Eleanor agreed, walked over to our 55-inch TV and swiped her finger on the screen just as if she were unlocking an iPhone, thinking that would turn it on. Realizing what she had done, her sheepish grin said it all “Wait, how do you turn this thing on?”

Since this happened, we’ve cut the cord, coming to the realization that most of what we watch is from an online source and the programming we do watch on broadcast can typically be accessed online one way or another. But the devices we use to watch video also significantly impacted the decision. Like many families, we own several decommissioned iPhones, which have found new lives as video players, even becoming the preferred screen devices for my kids. According to NPD/Connected Intelligence’s Application & Convergence Report, TVs remain widely used but mobile devices figure prominently into the viewing equation among younger consumers. In fact, smartphone users 34 and under over-index for using smartphones to watch online video (31 percent compared to 20 percent overall) and tablets (41 percent compared to 30 percent).

The fact that younger viewers are more likely to turn to mobile devices to watch video is innocuous enough, but does it point to any challenges down the road for sales of TVs, Blu-ray players, or even soundbars? My cord cutting experience has taught me TV viewing habits are engrained in our psyches (I’m still adjusting to the new cord cutting era at my house) and by that reasoning, my kids are likely imprinting their habits on smartphones and tablets more so than the television, since they spend a majority of their viewing time on those devices. This is probably happening naturally in some homes that have cable but is even more pronounced in non-cable households like mine.

A few trends in hardware sales and usage may be pointing to a shift for young viewers. Even though tablet sales declined in 2015, NPD’s Consumer Tracking Service reports more tablets are being purchased for kids and teens – in both absolute terms and in unit share- which has increased from 13 percent in 2012 to 19 percent in 2015. Conversely, unit sales of smaller screen TVs (under 44 inches) intended for those under 18 have declined 50 percent since 2012 and now make up just 5 percent of all sales. And NPD’s recent Kids Share of Time and Wallet study, a national survey of moms about their children’s’ activities showed that while a majority (75 percent) report their kids 14 and under still watch traditional TV, 47 percent of kids also watch TV shows, movies, and videos on a mobile device during a typical week. Further, nearly a third added their children are spending more time watching video content on devices this year compared to last.

Obviously, these data points alone don’t say definitively that young people are turning away from TV in a manner that will impact sales. However, the data does reflect a preference for small, personal screen devices for video consumption. New generations of consumers are important to any industry but are particularly vital to technology since they are on the cusp of entering life stages like homeownership and parenthood where their need for new technology products is heightened. Today’s Millennial and younger generations are entering a favorable technology market where many products including big-screen TVs are more affordable than they’ve ever been. The question isn’t if they will ever buy a TV, because they probably will. Rather, the issue is when will they decide to buy one, how much will they pay, and how quickly will they buy another – all things that a heavy reliance on mobile devices could potentially disrupt. Bigger screens still provide a better viewing experience, but in Eleanor’s case, complete control over what, when, and where to watch is the biggest draw to watching video on an iPhone. And as the saying goes, old habits are hard to break.

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March 10, 2016

A Tale Of Two Phones

“Mr. Watson, come here, I want to see you,” said Alexander Graham Bell, as he made the first ever phone call 140 years ago yesterday. And, of course, I’m sure Mr. Watson came running from the other room, probably wondering why they couldn’t have invented video conferencing instead. How times change; when the landline phone rings at my house, the kids barely look up from their smartphones and no one makes a move to answer the thing. And so it rings and rings until voicemail finally kicks in…and no one bothers to check that either. If you want to talk to one of us, call us, not the house. And yes, we all have video conferencing, but on our own personal little screens.

My family is hardly alone in this; dropping the landline phone altogether was the original definition of “cord cutting,” and the business has been in decline for a decade. Instead, mobile continues to be the ultimate solution, and maintains an almost constant state of evolution to ensure it stays relevant. That is key, because voice calls are clearly not the core reason why we carry these devices anymore. So to fine-tune my comment above, if you want to “talk” to one of us, send a message or group chat – don’t call.

While the innovation continues to march forward, I’m not sure that the mobile business is as healthy as it could be. Outside of a couple of well-known brands, most handset OEMs struggle to sell enough volume to make the whole thing worthwhile, at least in the U.S. market. And at the same time, thanks to no-contract pricing and the disappearance of subsidies, consumers are now holding onto their phones for longer and longer. It’s amazing what happens when we all realize that the $200 smartphone of yesterday now costs us the full price of $600 or more. Indeed, according to one of our recent surveys, 50 percent of consumers hold onto their phone for at least two years, and 25 percent for more than 2.5 years, which is not great news for the OEMs. Or even, for that matter, for the carriers, who benefit from increased loyalty when we buy a new phone, contract or no contract, as the additional payment is typically part of a multi-year payment plan.

We’re starting to see subsidies of one form or another creep back into carrier marketing initiatives. The Samsung S7, for example, launches today, and many carriers are already promoting it as a “buy one, get one” (BOGO). Sure, technically, it’s not a subsidy per se, but it’s awfully close. Someone, somewhere is taking a hit to make this promotion work. And the S7 is far from being the only deal in play right now. Even the iPhone 6s benefits from the occasional BOGO, such as the one currently available from AT&T.

I understand the reasoning behind such moves – particularly a BOGO, where the goal is to make two lines safe from churn, or persuade two consumer lines to jump over from another network. But I can’t help but think that there have to be better ways of protecting the base through increased service value or features, rather than a cost-cutting exercise that is usually immediately copied by your nearest and dearest competition. Of course, that begs the question of what else a carrier can do to differentiate themselves – and that’s clearly a hard question to answer. There are some current examples in play, such as AT&T’s NumberSync and T-Mobile’s BingeOn, which allow the carriers to move beyond the traditional price, coverage and speed discussions. They are clearly not enough on their own – at least not for the broad target audience – but they are a very positive step in the right direction.

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March 8, 2016

Movies Escape from (Virtual) Reality

Going to the movies was my favorite way to escape a mundane suburban childhood. Raiders of the Lost Ark was the first film where I truly felt the peril of the movie’s hero with heart-racing adrenaline and a first-person perspective. Gripping the seat with both hands, I lived through the moments with Indiana Jones as he narrowly escaped a booby trapped cave, ran for his life through a primitive jungle and was dropped into a den of slithering snakes – barely avoiding certain death, time and time again. In that darkened movie theater, it was hard to imagine anything feeling any more real and thrilling, but the advent of Virtual Reality promises to raise the game, bringing consumers an even fuller, more immersive experience.

Advances in entertainment technology can be major game changers. Digital video projection, DTS audio and IMAX movie theatres have elevated our cinematic experience, and set new standards for enjoying movies. 3D became the new must-have cinema upgrade in the late 2000’s, and audiences eagerly donned the slightly awkward glasses for the eye-popping benefit of added depth of field. But somewhere along the way, 3D became a nice-to-have gimmick instead of a must-have viewing preference. Whether it was the visual disorientation or price-conscious audiences shying away from 3D’s higher ticket prices (up to $4 more), the market has definitely cooled towards 3D; this decline is a cautionary tale for would-be VR content creators.

Virtual Reality won’t be an easy plug-and-play for filmed entertainment. It’s not that viewers wouldn’t want to experience a character’s point of view, but an interactive camera would clearly undermine a director’s storytelling. I miss out on critical movie plot points as it is, much less if I could get repeatedly distracted by looking around the screen at things that catch my eye. Netflix recognized the importance of keeping the source material intact, and its VR app plays video content on a TV screen in a virtual living room. It’s a novel approach akin to watching a movie within a movie; however I’m not convinced the presentation does much to enhance the movie itself. Hulu takes a different tact, offering two dozen+ titles through Samsung’s VR headset that are mainly nature-filled panoramas. It does a great job of showing off beautiful scenery with a 360-degree lens, but Discovery Channel/National Geographic-type programs aren’t what most viewers want when they sit down to watch TV at night.

Unscripted content is likely the best fit for VR, and entertainment companies ranging from movie studios, to vanguards Amazon and Google, are scrambling to get into the game. There’s clearly a market for first-person, live streaming content (think Periscope, Facebook Live, YouTube Connect, et al), since living vicariously through others is practically a core human condition. VR is the perfect vehicle to take our innate curiosity to a much deeper level of intimacy. The rush of skydiving, the wonders of a coral reef, or the live energy of a rock concert mosh pit will all be immersive, explorable worlds accessible to anyone with a headset. Voyeuristic vs. story driven, VR has potential to be an entirely new type of entertainment, but as a supplement to traditional movies, rather than incorporated into them.

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December 29, 2015

Smart Speakers: About More Than Just Music

2015 has been another banner year for the audio market.  While sales of stereo headphones and soundbars have grown 18 percent and 13 percent, respectively, according to The NPD Group’s Retail Tracking Service, so too have wireless speakers.  In fact, the wireless speaker market figures to eclipse $1.5 billion in volume by the end of this year as an array of pricepoints, features, and form factors offer consumers plenty of choice in the market.  There are also options for consumers when it comes to how their speaker connects with an audio source. Bluetooth speakers, which access content from a Bluetooth-enabled device like a smartphone, tablet or PC, accounted for 84 percent of sales this year. Network speakers, on the other hand, which have the ability to stream music over a home Wi-Fi connection, accounted for 16 percent of sales.  The advantages of these Wi-Fi connected speakers are most notably better sound quality and the ability to conveniently access content wherever it is saved- whether on a network connected device in the home or directly from a cloud music service.

The direct connection to the cloud points to the potential for network speakers to do more than just stream music and podcasts.   Amazon’s Echo, a network speaker which offers access to several music streaming services, also features Amazon’s personal assistant, Alexa, and a microphone.  It’s possible to ask Alexa to cue up a song, but you can also ask her what time The Force Awakens is playing at your local theater, read aloud the ingredients to your favorite recipe, or tell you a joke.  According to Connected Intelligence’s Connected Home Automation Report, 42 percent of smart phone owners have used a personal assistant app like Siri or Cortana on their smartphone, but a speaker (or a couple of speakers) inside the home that can both play music and search for information on the web is a different user experience altogether. The Echo is a good sounding speaker, but music playback is hardly the lone use case for the device.

The Echo is the first in what proves to be a wider field of “smart” network speakers that can access services and information directly from the web.  I’ve owned an Echo for about a week, and for me the most useful features so far have been setting timers (“Alexa, set a timer for 10 minutes”), getting the weather report, and being able to ask random questions such as “Alexa, how many millimeters tall is the Washington Monument?” (It’s 169,164 millimeters, by the way).  Sonos also recently took steps towards smartening their line of speakers, updating the PLAY:5 by adding an accelerometer and a microphone.  Both of these new components are officially aimed at tuning the speaker to match the acoustics of the room it’s in, though I expect the microphone on the PLAY:5 will soon be able to connect to a set of web services via a personal assistant, similar to the Echo.  In a multi-room system, this capability could be powerful, allowing users to access the functionality anywhere there is a speaker in the home.

An even bigger opportunity exists when network speakers can control other connected products inside the home.  The aforementioned Echo is compatible with several smart home platforms including Philips Hue, WeMo, SmartThings, and others.  As the smart home market matures and users add more devices to their homes, control and monitoring capabilities will likely need to migrate to other places.  According to NPD/Connected Intelligence, control of smart home products is primarily done via smartphones (64 percent of smart home owners report this) and tablets (34 percent), but inevitably there will be times when a mobile device isn’t nearby or convenient to use.  Being able to ask a bedroom speaker to turn on the hallway light in the middle of the night, if done correctly, could lessen our reliance on these handheld devices while inside the home and make the experience of using and controlling smart home products a little more natural.

While one can argue the term smart has become overused in today’s technology lexicon, network speakers have the potential to become pretty darn smart.  But really, this connectivity powered by voice control could be incorporated into other consumer technology products.  In addition to smartphones, we’ve seen a few TV manufacturers dabble in voice control and media streaming devices like Roku, Apple TV, and Amazon’s Fire TV products also support voice-enabled search.  Consumers are getting used to using personal assistant applications like Siri and Google Now and as the applications become more refined and support a greater number of web-based services, expect them to become essential to how we interface with some connected products in our homes.  On the surface, smart speakers seem like yet another technology product we’ve connected to the Internet, but with access to a diverse range of web services and content controllable via voice, they have the potential to be so much more.


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