Understanding who is buying apparel and footwear items is critical in today's competitive climate. "Don't try to sell the same product to consumers of different ages," Marshal warned. "Teens aren't buying what their parents want to wear, and older consumers don't want to look like kids. Understanding who is purchasing is just as important to your business as knowing what is purchased," he said. Manufacturers and retailers who want to grow their businesses in 2004 should strive to understand their target audience. Today it's about more than just knowing how much of your product you're selling. It's about knowing who is buying and wearing your products.

Consumer technology:
2003's strong finish bodes well for 2004
Steady improvement was the watchword in consumer technology in 2003. "While the early parts of the year were very challenging, with a tough economy, lackluster products and weak demand (which led to weak pricing) proving very difficult to overcome, the second half of the year was extraordinary. Weak categories turned around, high-growth categories continued to accelerate and emerging categories began to capture the consumer's interest and the retailer's eye," said NPD Techworld Director of Industry Analysis, Stephen Baker. NPD Techworld consumer data show technology sales in 2003 reached nearly $103 billion overall, an increase of almost 6% from 2002.

The strong performance of the second half of 2003 came as the consumer technology industry faced its most challenging period ever. "This year is likely to be the first of many disruptive years, with new players, products and pricing schemes beginning to impact consumers' technology purchases like never before," Stephen said. In 2004, he expects to see significant inroads in consumer spending on technologies such as flat panel and plasma TVs, DVD recorders, wireless connectivity and digital video recording into the mainstream American family room.

Why does 2004, and beyond, look so exciting, and scary, in the technology space? In a word: Convergence. "The much ballyhooed merging of traditional computer and electronics technologies has begun to occur and it represents the promise, and the peril, to all concerned," Stephen said. "All in all," Stephen said, "2004 is shaping up to be an exciting and challenging year in the consumer technology space."

Food: Slow growth is better than no growth
"Everyone in the food and beverage and restaurant businesses is looking for growth in a slow-growing market," said NPD Vice President Harry Balzer. "The growth is happening, but quietly. Consumers are returning to restaurants, with major chains leading the way. The real test will be in the last half of 2004. Will restaurant usage increase over the strong year-ago numbers?" Harry asked. By the end of this year, Harry expect that we may have a clear picture of whether Americans are still willing to pay for the convenience of having someone else prepare their meals.

Toys: Learning, mini-dolls and licensing are the big stories
NPD Funworld Industry Experts Christina Charasse and Mike Redmond weighed in on the state of the toy industry, reporting that successful Holiday 2003 introductions and licensed products, very hot in 2003, should retain their momentum, helping to boost spirits in an industry challenged by change. Learning and exploration-oriented toys introduced during the holiday season were among the biggest hits for holiday shoppers, and licensed toys were extremely important to overall toy sales in 2003, outselling non-licensed products. Since spring and summer 2004 will be crammed with movie releases geared to kids, licensed products that tie in to these anticipated box office hits should fare as well - or better - as last year's favorite licensed properties. Another area of strength in 2003 that should continue this year is the mini dolls category. Christina believes retro-inspired dolls like Strawberry Shortcake and My Little Pony, in particular, will be strong sellers in 2004.

In the video games arena, "software is the growth and profit engine for about 90% of the companies involved in the video games industry," said Richard Ow, NPD Funworld senior video games analyst. More than 186 million games were sold in the U.S. in 2003, representing a 5% increase in software sales over 2002. "That growth occurred despite an 8% decrease in average selling price and a glut of new software titles that joined thousands of games already on store shelves," Richard said.

Richard expects 2004 to yield more stories about price drops and questions related to whether the industry will exceed the $10.3 billion sales record set in 2002. He'll be watching the core gaming market's response to this year's software launches, market expansion due to dropping price points and value-conscious consumers and the move toward multi-functional entertainment systems.

Beauty: Yesterday's and tomorrow's trends, today
Many of the underlying prestige beauty industry trends observed in past years still prevail in today's challenging brand and retail environment. NPD Beauty President Timra Carlson explained in the recent "Hot Off the Press" report that several factors have great potential to change today's retail community, brand landscape and beauty consumer mindset. These include consumers' price/value perceptions, the growth of "big box" stores with wide brand portfolios, consumers' willingness to trade up to more luxurious products, retailer homogeneity and market segmentation.

Timra has identified multiple emerging trends that may play important roles in prestige beauty products' performance in 2004. "Watch for channel shifts as discount stores, warehouse clubs and even dollar stores become mainstream outlets for beauty products. Increases in catalog and Internet sales also could change the prestige beauty landscape in 2004. Fragrance counters organized by "families" of similar scents and increasing sales of men's products will be important this year, as will non-traditional beauty products such as lip tints, primers and makeup accessories," Timra said. Last but not least, Timra advises manufacturers and retailers to watch private label trends carefully - that's an area where she expects to see an increased presence of a sense of prestige in the year ahead.

Automotive and Convenience Stores: The Ups and Downs of Consumer Spending
Dollar sales in the auto parts specialty retail channel ended 2003 up slightly over 2002, thanks to some shifts in buying patterns as well as overall improvement in the business environment in the second half of 2003. Unit sales fell 5.4% compared to 2002, however, third and fourth quarter 2003 sales figures point to a possible upward trend for 2004. "Part of the reason dollar sales were up in spite of a unit sales decline is a shift in some categories to more premium-priced items. This phenomenon is most pronounced in the windshield wipers category where consumers are opting for more expensive replacement blades instead of lower-priced refills. That trend spurred the total category to 16.4% dollar sales growth versus last year," said NPD Automotive Senior Account Executive David Portalatin.

It seems that many retail channels are envious of one big advantage that convenience retailers have: consumer purchase frequency. Convenience store customers have historically frequented the channel on average seven or eight times per 30 days, with the heaviest of shoppers making their favorite "c-store" a daily habit. "Lately, though, competition from other channels for increased sales of gasoline, single-serve beverages and meal solutions means consumers are barraged with choices other than convenience stores," David said. "Grocery, drug, and mass retailers are going after c-store customers by offering convenience- oriented products such as gasoline, single serve beverages, and meal solutions. As this competition heats up, we're seeing declining frequency in the convenience channel. Gasoline price volatility will also play a role in determining how convenience retailers fare in 2004. During periods of severe price increases to consumers in 2002 and 2003, consumers reacted by limiting their non-fuel convenience purchases and by shopping for fuel in alternative channels."

For more from our Industry Experts,
visit the NPD Worlds . . .