Now that the kids are back at school powering up their new laptops and tablets, electronics companies are crossing their fingers and hoping for that bright shopping light to shine at the end of the year.
The Christmas countdown has begun, and all sorts of trend counters are trying to figure out how many new phones, tablets, computers, appliances, TVs, and pick-your-gadget-of-the-year will be unwrapped in a few months.
ShopperTrak, a research firm that analyzes retailer foot traffic, anticipates decent growth for the coming Christmas shopping season -- except for electronics. On the upside, overall national retail sales in November and December should rise 3.3 percent from the same period last year. The downside: In the electronics and appliance sector, foot traffic should drop 8 percent, though sales should increase 1.5 percent.
Bill Martin, ShopperTrak's founder, said in a press release:
Some of the traffic decline in the electronics and appliance category can be attributed to consumers going online to research premium-priced purchases or to purchase items at discounted prices. You can't, however, ignore the fact that 92 percent of total GAFO [general merchandise, apparel and accessories, furniture, and other] retail sales still occur in brick-and-mortar stores. Retailers who align their in-store and online strategies to provide multiple touch points and distinct value offerings for consumers will come out on top.
OK, so that's a glimmer of hope. Christmas may not be a washout. Still, it has been a depressing economic year by and large for many high-tech firms, and other headlines give me a tempered view going into the last quarter of 2012.
Royal Philips Electronics N.V. (NYSE: PHG; Amsterdam: PHI) , a European bellwether, is going through a multi-year restructuring to cut costs. Last week, it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further. These cuts, in addition to the 4,500 announced previously, "bring the cost-cutting target to 1.1 billion euros by 2014," according to Bloomberg Businessweek.
Also, exports from Singapore, a key Asian supply chain hub and the place where many high-tech companies run their logistics operations, dropped more than economists anticipated in August. The primary reasons cited were lower European demand and weakness in China.
Looking at these numbers, maybe it's not a surprise that this year's IFA, a tradeshow for consumer electronics and home appliances in Berlin, broke records. From the end of August to early September, 1,439 exhibitors presented product debuts to 240,000 attendees (up 1 percent from last year).
Maybe with the broader market uncertainty, hitting the showroom floor and scouring for deals among colleagues isn't such a bad idea.
"it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Rich Krajewski9/22/2012 5:20:03 AM
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" elctrnx_lyf9/23/2012 8:55:00 AM
Are there many more job cuts in the pipe line from many companies. The consumer electronics companies are definitely looking for a great christamas season.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" hash.era9/23/2012 9:39:52 AM
Job cuts will be there even though the market has settled upto some extent. It will continue to be the same for a couple of years more since the companies have to make up for what they lost during the crisis.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Rich Krajewski9/23/2012 2:46:24 PM
"Job cuts will be there even though the market has settled upto some extent. It will continue to be the same for a couple of years more since the companies have to make up for what they lost during the crisis."
Companies are going to have to wait a long time, then. Lost productivity is lost forever, or so I understand. Can't go back in time and make up for what's gone. Maybe you're thinking that companies will want to make the retained earnings accounts a little fatter before going out and investing more. The problem is, labor is thinking it should be cautious, too, so we have a perpetually dampened system at work that keeps the economy stuck in slow growth.
Without some kind of intervention, such as a war or some enormous technical breakthrough to goose the system into growth again, we likely will continue globally slow growth. Of course war is like taking certain kinds of drugs. You may get a temporary boost, but you also do long-term damage. Still, history points in that direction.
Some Christmas. I hope I'm wrong. But, I don't see China and Japan patting each other on the back. Instead, I see warships.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" hash.era9/23/2012 11:13:15 PM
True Rich and I feel that it will be a long christmas this time. There are so many people who has qualifications plus experiance waiting outside for a job. I feel the job market is sewcure right now but not stable since one little collapse will shake everything all over again.
Other factor is that the job seekers will go for any salary right now just to make sure that they are not un-employeed. This will create a big issue in the market where people will be hired not on qualifications and knowledge but on salary expectation which is not good at all.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Rich Krajewski9/24/2012 3:13:45 AM
I agree, and that's why I don't think we'll have that great a Christmas shopping season. Desperation doesn't make for expansive gift giving. The life-support edge that the consumer electronics business has, if you can call it an edge, is the number of lower cost clones appearing to appeal to those who are feeling the economy's pinch, but who still want the benefit of today's tablet electronics. Take me, for example. I bought a cheap tablet recently for $89, but only because it allowed me to buy a $250 textbook for $150, and read a five-pound book on a five-ounce tablet in bed.
Apple may be doing well by skimming the cream with its newer model i-Whatever, but overall I don't think this is going to be a blockbuster sales season. I hope I'm wrong.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Jennifer Baljko9/24/2012 5:08:18 AM
Rich K - I guess we'll see what happens. I think consumers have cut back on spening disposable incomes ( ie, not taking extended vacations or staying closer to home, or shopping at cheaper food markets), but I think there could be some pent-up buying agnst that seems to give holidays a boot... maybe people have put off buying, say, new shoes so they buy a tablet later in the year.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Rich Krajewski9/24/2012 4:31:35 PM
"there could be some pent-up buying agnst that seems to give holidays a boot"
Oh, I agree that there is pent-up demand based on unmet needs. There is just no money to back it up. This is different from delaying purchases because of caution. This is a spreading inability to buy because of dwindling resources, in my opinion.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Bolaji Ojo9/25/2012 8:03:16 AM
Rich, The signs are there for all to see. Corporations are tightening spending again, consumers are still concerned about job growth and with inflation still low and wages under tight control, it's unlikely sales will be strong in the December period. I am not even thinking of "gifts" right now at a personal level. And from recent announcement from logistics companies like UPS and FedEx, it's more realistic to expect and be grateful for a warm hug in December than an expensive gift.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Rich Krajewski9/25/2012 3:33:20 PM
"And from recent announcement from logistics companies like UPS and FedEx, it's more realistic to expect and be grateful for a warm hug in December than an expensive gift."
Not surprised if UPS and FedEx data stays flat for awhile (unless it gets a boost from people not wanting to travel to shop). Concerning personal economizing, I made my wife some candy for her birthday out of natural peanut butter, honey, and dry milk. Topped that off with a public domain, electronic copy of a book about a Roman general (she loves history). The warm hug sounds pretty good. I'll tell her you said I should give her one.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Mr. Roques9/26/2012 5:17:02 PM
Is that company also tracking how early are people buying gifts? I would expect most people wait for Black Thursday and all other super sale days... and with electronics, sometimes the more you wait, the better (I wouldnt expect many people to buy tablets right now, they probably wait for the iPad Mini ... if they are looking for that 200 - 250 price range).
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Jennifer Baljko9/27/2012 6:21:51 AM
Roques - I agree. I don't know if this company tracks when people buy, but I imagine there are a decent number of shoppers who buy gifts in a more phased, economically sane approach, spreading their spending over five or six months and use sales and online coupons to their advantage. But that's probably just a small number of people...
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Bolaji Ojo9/25/2012 8:03:17 AM
Rich, The signs are there for all to see. Corporations are tightening spending again, consumers are still concerned about job growth and with inflation still low and wages under tight control, it's unlikely sales will be strong in the December period. I am not even thinking of "gifts" right now at a personal level. And from recent announcement from logistics companies like UPS and FedEx, it's more realistic to expect and be grateful for a warm hug in December than an expensive gift.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" hash.era2/16/2013 10:24:21 PM
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Jennifer Baljko9/24/2012 4:57:27 AM
hash.era - agreed, it will still be a couple years before we see wider-scaler recovery, but the Christmas season always seems to hold some hope for industry watchers.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Wale Bakare9/24/2012 11:46:03 AM
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Rich Krajewski9/23/2012 2:33:12 PM
"The consumer electronics companies are definitely looking for a great christamas season."
I hope they like coal, because I wouldn't be surprised if that's what they get this year.
I can see product-units-sold climbing, as we start to see more and more $89 tablets being pushed through the discount channels such as Big Lots. Maybe even revenues will climb a modest percentage. But I can't believe margins are going to be sustainable at healthy levels. I mean, there are basic, usually recession resistant companies going out of business near where I live. Plumbers, bars, and pizza places are closing shop. This makes me suspect that the US is in much worse shape than you'll ever read about in the news. And regardless of what the government says, prices for the basics (for non-electronics, that is) are doubling and tripling, while incomes are likely declining in real terms (not the "real" terms that the government publishes, which are anything but real).
If it's a good sales season this year, it will be just an "up day" in the hospice, in my opinion. I hope it's more than that, but I'm pessimistic.
Re: "it said it will have to cut another 2,200 jobs to save an extra 300 million ($389.5 million) as economic conditions deteriorate further" Jennifer Baljko9/24/2012 4:55:33 AM
elctrnx_lyf - In Europe, many companies have given cautious outlooks for the rest of 2012... what that translates to in terms of holiday sales and layoffs is uncertain.
Speak to 6 different pundits and get 6 different views on the economy. I reckon we are still bobbing along choppy seas with no safe port in sight (sorry, that's 7 pundits now). I truly hope the Christmas numbers are good but I would not bank it yet.
Difficult to address and all measures to simulate quick recovery in near practically ineffective. Watching TV news this week reporting 2 or 3 manufacturing/utilities firms announcing jobs cut not nice. How would those affected thousands of workers get on with xmas sales? Again, throwing into the stack of avalanche of jobless list, and/or waiting to enqueue for government's handouts for survival. Too bad!
Rich, it seems like small scale umbrella manufacturing companies. They used to hire more peoples at summer seasons for increased production and assembling of umbrellas for the next rainy season. When they have enough number in their stock, they cut down about 75% of jobs because during rainy season they need only marketing guys. Every year the same cycle is happening. So the big brands are also following similar strategy and after X'mas shopping season they may also start recruiting process once again.
"So the big brands are also following similar strategy and after X'mas shopping season they may also start recruiting process once again."
I wish that would come true, but I've been hearing about how things will get better next year for several years now, and I don't think many people believe it anymore. Yes, managing expectations is important in an economy, and that's why the government does it, because if everyone is convinced there will be a collapse, then there will be one, but the abilility to manage expectations is fading fast.
i do not know/see how the growth will happen only after elections. As the article suggest the weakness in market is mainly due to EU and China. So, USA elections seems to have very limited impact. The market is recovering well but the EU is pulling down the seemigly good recovery.
Here's my analysis: "Foot" traffic will be limited to the crazies that line up in front of Wal-Mart on Thanksgiving night that are willing to crush fellow humans in the rush for an HDTV. Job growth will be limited to seasonal workers: the extra folks that UPS/FedEx/DHL hire; hapless security people for Black Friday crowd control; and retail clerks that will be idle up to Christmas Eve. Amazon.com will have a blow-out year; acquire NetFlix; and show Wal-Mart and Target the error of their ways when they stopped selling the Kindle.
Barbara - I think you said it best... and -- minus the Amazon acquisition prediction -- sounds like patterns we seen in the last few years. Point being - the more things change, the more they stay the same.
Except for Amazon, those things happen every year, no?
I also believe Amazon is in for a big year. They are not doing bad, but I think they will continue to sell a ton of tablets. I don't think Google had the same impact with the Nexus 7, even if its a more complete tablet.
Those 2, with Apple, have the option to leave a small margin in the tablet market (making the actual $ with the apps). Samsung and others can't afford that.
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EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronicswith a lean supply chain and just-in-time demandsthe need to know the future is vital.
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Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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