Consumer Electronics: Nesting drives up home entertainment

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The pull toward home and hearth in the aftermath of Sept. 11 was generally good for home-entertainment products, lifting sales of big-screen TVs, wireless phones and big-ticket appliances. People wanted to hunker down at home, improve their surroundings and the quality of their family life.

However, it's difficult to get a precise handle on the depth of the uptick because for starters, the fourth quarter is typically the most significant period for consumer electronics and major-appliance purchases. Also, an economy in recession caused people to hold on to their dollars more tightly. In fact, people were already predisposed to searching for good values and making their dollars stretch.

DVD players, all-in-one home-theater systems and color TVs had strong sales the day after Thanksgiving 2001, posting 53%, 173% and 23% gains, respectively, according to NPD Techworld. Wireless-phone purchases rose 29% year-over-year, as people who didn't have a cellphone purchased their first, and existing owners upgraded their service plans or traded up to a new handset. Home-theater system sales are projected to hit $94.5 million in 2002, a 24% increase over 2001, according to the Consumer Electronics Association.

But it remains too early to tell whether seasonal sales spikes will propel continuous sales growth. Overall, shipments of consumer-electronics to retailers are projected to reach $95.7 billion in 2002, according to the CEA. That represents 3% growth over 2001's sales of $93.2 billion. So it's doubtful that post-Sept. 11 concerns will catapult sales. More indicative is how soon the economy recovers and home sales rebound. Consumer spending, while keeping the wobbly economy from a free-fall, is far from free flowing.

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