NEW FROM NPD
Global Reach
| Australia | Mexico |
| Austria | Netherlands |
| Belgium | New Zealand |
| Canada | Poland |
| China | Portugal |
| France | Spain |
| Germany | Sweden |
| Italy | Taiwan |
| Japan | United Kingdom |
| Korea | United States |
Insights Mission
HomeCover Story
2008 Outlook: Shoring Up Sales in a Shaky U.S. Economy
Opportunities for growth are out there – they just may be a little harder to find
Anyone who’s read the papers, scanned an Internet news site, or caught even a moment of broadcast news knows the story: the economic outlook for 2008 doesn’t look very rosy. In fact, after the sub-prime mortgage fiasco and other economic problems, inflation – formerly kept in check – is estimated to have risen in the fourth quarter of 2007. And that’s a worry shared by consumers, retailers, and manufacturers.
But don’t hit the panic button just yet. First, have a listen to NPD’s industry analysts. Across a spectrum of industries – video games, consumer technology, home products, and fashion – they have identified areas of opportunity marketers can mine, potentially transforming adversity into surprising success. Here is a top-line review of several trends to keep in mind if you’re refocusing your 2008 plans and expectations.
Older Buyers for video games
With the “console wars” continuing into 2008, this year in video games is shaping up to be just as interesting as 2007 proved to be. One likely difference is that growth in non-traditional gamer demographics is expected to be an area of opportunity for the industry.
“Sales growth to non-traditional gamers outpaced growth overall,” said Anita Frazier, toys and gaming analyst. “The industry must continue to court the occasional gamer and non-gamer to continue to realize growth.”
In 2007 the 35-and-older age demographic showed the greatest percentage growth, driven by software and accessories acquisitions. Purchases in which females were the primary recipient increased 35 percent, with strong growth in all three areas.
| Video Game Hardware Unit Sales Growth by Age Segment, 2006 vs. 2007 |
|||
| Age | 2006 | 2007 | % Growth |
| Total | 22,514,910 | 29,870,340 | 32.7 |
| 8 and under | 3,107,723 | 3,957,054 | 27.3 |
| 9 to 12 | 5,128,897 | 5,917,220 | 15.4 |
| 13-17 | 3,593,824 | 4,627,201 | 28.8 |
| 18-24 | 3,192,630 | 4,534,897 | 42.0 |
| 25-34 | 2,127,497 | 3,476,521 | 63.4 |
| 35+ | 5,364,336 | 7,357,446 | 37.2 |
| Source: The NPD Group/Consumer Tracking Service | |||
In Fashion, Think Dressy!
"Many of the key fashion trends in 2008 are drawing from concepts that started last fall," said Chief Industry Analyst Marshal Cohen. "Women’s dresses will continue to show strong sales through 2008, as will accompanying hosiery sales – especially opaque tights."
Piggybacking on the resurgence in the trend toward a more dressed-up appearance, men's tailored apparel – and especially tailored sportcoats, suit separates, and dress shirts – is also expected to fare very well in the coming months.
In footwear, low-performance athletic footwear and skate shoes recently have shown strong growth. Cohen expects this strength to continue throughout the spring and summer.
| Sales of Women’s Tailored Clothing 12 Months ending December 2007 |
||
| Class | Dollar Percent Change Jan-Dec 2006 vs. Jan-Dec 2005 |
Dollar Percent Change Jan-Dec 2007 vs. Jan-Dec 2006 |
| Total | -3.6 | 3.6 |
| Dresses | 7.1 | 43.7 |
| Skirts | -2.3 | -23 |
| Sportcoats/Jackets | -10.5 | -1.3 |
| Suits | -16.1 | -14.2 |
| Source: The NPD Group/Consumer Tracking Service | ||
Downsizing Food
Rising food prices both in-home and away-from-home likely will be one of the top stories of 2008.
“Consumers will modify the effects of the changing economy by shifting their restaurant purchase behavior,” said Bonnie Riggs, foodservice industry analyst. “They may trade down to less expensive restaurants, choose less expensive dayparts, order from a value menu, purchase a snack, or order less expensive items. Operators also may notice consumers sharing an entrée more frequently, ordering appetizers instead of entrees, or declining to order beverages or desserts.”
“Operators have been struggling with high energy, food, and labor costs. As these costs continue to squeeze margins, menu price hikes are likely. Operators, especially concepts at higher price points that are already struggling, will need to create strong value propositions. This is going to be a major challenge facing the entire industry in 2008,” Riggs said.
The Digital TV Switchover Bonanza
"As many of the fastest growing electronics categories mature in 2008, overall electronics sale growth is likely to plateau," said Stephen Baker, Vice President, Industry Analysis.
One key product area to watch for good things in 2008 is televisions, since consumers may replace their sets in preparation for the analog broadcasting cut-off slated for February 2009. While there will be a rush for low-cost subsidized converter boxes, manufacturers and retailers will also try to entice consumers to upgrade to digital televisions.
The “Green” House Effect
In the home-related industries, 2007’s much-hyped outdoor living trend looks like it will have legs in 2008, as well. Non-conventional living spaces outside the core of the home (such as the garage as “man-cave”) also are coming on strong.
And “green living” is an area to focus on this year: “Although still a relatively young trend, ‘green is good’ and is showing signs of potential,” said Mark Delaney, director in NPD’s Home division. “The key is to focus on educating the consumer and cutting through the confusing clutter.”
He added that consumers clearly are struggling with the price/value relationship when it comes to going green. There is some consumer sentiment that manufacturers and retailers may be taking financial advantage of this movement to increase their margins. “Sure, consumers want to do the right thing,” Delaney said, “but in a tightening economy, they can’t afford to pay substantially more for these products, either.”
To find out where opportunities exist for your business, contact Charles Camaroto at 866-444-1411 (contactnpd@npd.com).