It's getting to that time of the year when consumers dash around shopping centers and online outlets, pull out the credit cards, and buy up nifty gadgets for loved ones on their holiday-gift list. For electronics companies, the next four to six weeks brings with it some nail-biting anticipation.
This year, like the recent few, there's a gray cloud over consumer spending projections in Europe. Concerns about the debt crisis, new austerity proposals coming on the heels of government turnovers in Greece, Italy, and Spain, and a mixed regional unemployment picture may cause consumers to pause before whipping out their wallets. That said, it's tough to resist the urge to snap up a smartphone, tablet, video game console, or similar devices, and pent-up demand may convert even the most hesitant buyers.
Some reports point to a slowdown in holiday spending as countries in the eurozone seem to be sliding back into a recession. Citing data from the European Union statistics office, the AP reported that the local economy "barely grew in the July-September quarter," making it "the second straight quarter of paltry growth." There's little hope for growth in the coming weeks as consumers and government are expected to spend less, according to the report.
Not to rub salt in the wound, but if there's any truth in a view credited to European Central Bank president Mario Draghi by the Mail & Guardian online we'd all be wise to brace ourselves for even deeper cuts in private and public sector spending: "Europe's politicians, not its central bankers, must solve the crisis through the implementation of policy reforms and austerity measures." This, in turn, will undoubtedly influence how end-customers view their personal job security and plan their household budgets for the coming months.
Consumer confidence reports for the EU are due out this week, and they may not look pretty either. Eurozone consumer sentiment is expected to slip to -21 from -19.9 in October; and in the UK, there's already bad news on the table as the monthly Nationwide Consumer Confidence Index fell for the fifth straight month in October to a new low point.
Even if the signs seem to point to weak holiday splurging, I'm betting companies like Samsung Electronics Co. Ltd. (Korea: SEC) are hoping for the best. Samsung, which has been embroiled in a patent lawsuit with Apple Inc. (Nasdaq: AAPL) over similarities in their tablet offerings, announced last week that it would release a modified version of its Galaxy Tab device in Germany this week. The news comes two months after a court barred the company from selling the tablet computer in Europe's biggest economy and just in time for the holiday shopping season. (See: Can the EU End the Apple-Samsung Patent War?)
I'm certain, too, many are hoping that the trade winds shift and some of the good retail tidings expected in the US blow towards Europe. Besides preliminary reports showing that US consumer spending has improved slightly, the Consumer Electronics Association's Annual CE Holiday Purchase Patterns Study shows that overall spending this holiday will increase as well. According to the organization, consumer electronics "will account for one-third of all holiday gift spending. Consumers plan to spend on average $246 on electronics gifts, an increase of six percent from last year and the highest level since CEA began tracking holiday spending." The top items on the wish list aren't unusual: tablets, laptops, TVs, e-readers, and video game consoles.
I guess we'll know in a few weeks whether it turned out to be a bright deck-the-halls selling season or if consumers adopted a Bah! Humbug! attitude. Retailers and the electronics supply chain are waiting with bated breath.