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NPD Cross Industry Analysis: 2009 Consumer Spending Trends
With all eyes on consumer spending and economic recovery in sight, NPD took a look at our most recent annual sales information industry by industry and tapped our industry experts to bring you trends and insights. How did your industry fare? How did it compare to others? Where were the bright spots? And where might we see growth as we enter the new decade?
Sales by Industry
Dollar Sales Change 2009 vs. 2008
Source: The NPD Group / Consumer and Retail Tracking Service
Technology
U.S. consumer technology revenue fell almost 5 percent in 2009 to $106 billion dollars. While overall revenue may have been down, that should not be taken as a sign that consumers were not buying. Total units sold increased marginally, with the industry selling over one billion devices, gadgets, and accessory products. The slight increase in units wasn’t enough to offset the decline in average prices, however, leading to the decrease in overall revenue. Average prices dropped about 6 percent from 2008 to 2009 to an average of $92 for each electronic item piece purchased.
“The industry lost ground this year, but in light of the overall economic conditions it was a performance that could have been much worse,” said Stephen Baker, vice president of industry analysis. “Retailers and manufacturers being aggressive on consumer electronics pricing kept the consumer engaged and shopping, an important success story to remember in such a dismal year. Categories like computers and flat-panel TVs, despite very high selling prices, saw significant increases in unit volume through this tactic. The uptick in fourth-quarter results, while partly the result of a weak year-over-year comparison, was also due to strong results from these categories – results that point to increased momentum as we head into 2010.”
Top Five Consumer Technology Retailers in 2009
Based on Dollars
| Brick-and-Mortar | Online |
| Best Buy | Dell |
| Walmart | Amazon |
| Staples | Best Buy |
| Target | HP |
| Apple | Apple |
Source: The NPD Group/Consumer Tracking Service
Video Games and Toys
U.S. retail sales of video games, which includes portable and console hardware, software, and accessories, generated revenues over $19 billion, an 8 percent decline over the $21 billion generated in 2008. Despite this recent dip in sales, the industry has seen tremendous success over the past 10 years.
"When we started the last decade, video game industry sales, including PC games, totaled $7.98B in 2000," said Anita Frazier, industry analyst, The NPD Group. "In 10 years, the industry has changed dramatically in many ways, but most importantly it was grown over those years by more than 250 percent at retail alone. Considering there are many new sources of revenue including subscriptions and digital distribution, industry growth is even more impressive."
U.S. retail sales of toys generated $21.47 billion in 2009 compared to $21.65 billion in 2008, a decline of under 1 percent. In contrast to fourth-quarter (October to December) 2008, Q4 2009 sales revealed that while revenues were flat due to heavy promotional activity at retail, unit sales were up 4 percent vs. Q4’08.
”2009 was a remarkably uneventful year for the toy industry, but in a good way," said Anita Frazier, industry analyst, toys and video games. "In a time of continued economic turmoil, toy industry revenues were very stable, and the uptick in unit sales in the fourth quarter is a very positive sign for the industry heading into 2010.”
“The increase in building sets and arts & crafts speaks to the entertainment value these categories deliver," said Frazier. "Both can deliver hours of open-ended play, and arts & crafts in particular does so at very attractive price points.”
Apparel
Apparel Growth Categories for 2009 |
|
| Jeans | 3.5% |
| Dresses | 2.3% |
| Bras | 1.1% |
| Tights | 2.4% |
| Men's Underwear Tops | 11.0% |
Source: The NPD Group/Consumer Tracking Service
Despite these bright spots, Marshal Cohen, chief industry analyst, warns, "Don't be fooled into thinking all is rosy and that we are out of the woods, just yet. Between ‘frugal fatigue’ and pent up demand, the consumer is spending but we will likely see a lull in February and March as they wait for their credit card balances to recover from holiday and January sales. Then, come the change in the weather, late March and April, consumers will likely be assessing their wardrobes and opening their wallets a little bit, again."
Foodservice
There’s no doubt about it, 2009 was a tough year for the U.S. foodservice industry. Competition intensified as traffic fell for five consecutive quarters. Some of the steepest declines occurred in the second half of 2009. Further, consumers were seen pulling back on visits across most segments and occasions.
No segment was left unscathed. Full service restaurant traffic losses were steeper than those noted for quick service, but both were down, and no meal occasion realized traffic gains. Parties with kids continued to decline the most, although in the last half of the year, adult-only parties also contracted. With higher unemployment rates, work-related visits were down.
Weak Consumer Spending at Restaurants Attributable to Strong Traffic Losses
Dollar % Change vs. Year Ago
Source: The NPD Group/CREST
Home
Though consumers seemed to put off purchasing expensive major appliances during the last year’s economic crisis, they appeared to allow themselves a little luxury in the form of small appliances. Dollar sales for major appliances declined 6.8 percent in 2009, while small appliance dollar sales grew slightly at 1.4 percent.
Dollar Sales Growth - 2009 vs. 2008
Source: The NPD Group/Consumer Tracking Service
“Overall, these results are indicators that the economy and appliance industry are moving back in a positive direction, but consumers are a bit slow to accept the idea that the recession is ending, if not over,” said Peter Goldman, president of NPD’s Home division. “Consumers remain cautious in their spending, looking at lower price options, but the key is to provide them with products that ultimately give them a sense of value.”
Beauty
“2009 was indeed a very challenging year for the beauty industry,” said Karen Grant, NPD vice president and global beauty industry analyst. “And now, as we head into 2010, the reality is that business will still be challenging. The other absolute reality is that consumers – as many as three out of five women – tell us they are buying beauty products because ‘they make me feel confident’ and ‘even in these tough economic times, I will still buy beauty products because they make me feel better about myself’. As our consumers increasingly seek the best product for the price or the best price for the product we must continue to stay focused on what will increase our relevance to them.”
Grant added, “In addition to a focus on product, we have to look at every way we can be in our consumers’ consideration set and be at the top of their minds. We have to be where they are spending their time. We have to talk to them where they will listen. Our consumers will try, stay, and buy where they see the value. 2010 is our year to renew, rethink, and revitalize.”
To find out how NPD information and insights can help you anticipate 2010 trends, contact Charles Camaroto at 866-444-1411 (contactnpd@npd.com).
