The frenzy of the US Thanksgiving shopping weekend is winding down, but not the continuous barrage of emails and advertisements determined to lure shoppers back into stores (online or brick-and-mortar) to continue to make their holiday purchases. The news from the anticipated highest volume shopping weekend, "Black Friday" through "Cyber Monday," has been very positive for the semiconductor and electronics industry.
Shoppers choose mobility
Black Friday sales for retailers were not as stellar as hoped going into last week, when sales started earlier than ever before due to a shortened shopping time between Thanksgiving and Christmas in the US. For the first time since 2009, Black Friday sales declined as a year-over-year level, as reported by Bloomberg:
In one of the other early reads on results, sales at brick-and-mortar stores on Thanksgiving and Black Friday posted an estimated 2.3 percent gain to $12.3 billion, according to a report from ShopperTrak, the Chicago-based research company. The results were in line with ShopperTrak’s prediction for holiday purchases to gain 2.4 percent, the weakest since 2009.
How does that translate into good news for our industry? Quite simply, while shoppers were not as resoundingly heading to the physical stores to contend with other shoppers and the hopes of unadvertised deals, they were hitting the internet and decidedly using their mobile devices. Including the "Cyber Monday" online shopping day of deals, in a separate article Bloomberg cites the latest data on the weekend shopping are pointing to the rising trend of online purchases:
Including shopping on personal computers and mobile devices, Internet retail sales on the Monday after Thanksgiving rose to almost $2 billion, according to researcher ComScore Inc. That made it the heaviest Web-spending day ever for the fourth straight year. More than $23.9 billion has been spent on the Web through PCs alone since Nov. 1, an 8.4 percent gain from the same period in 2012 […].
Importantly, what we see is that the decline in retail store shopping is not completely lost, rather we are seeing strengthening online sales which are necessarily made through individual PCs, tablets, and/or smartphones. Taking the trend of increased online sales along with the data that roughly one-third of holiday budgets are being dedicated to consumer electronics purchases, we see that for the semiconductor and electronics industry, the 2013 holiday sales are very likely to support overall market revenue and growth for the year.
Unfortunately for retail stores, the increased comparison shopping and targeted, planned shopping thanks to new Apps in use, is translating into fewer impulse purchases, which are really the lifeblood of positive retail store sales to offset deep discounts on select items. This year will likely prove challenging for retailers for economic reasons as well, the US middle- and lower-income shoppers have less disposable income this year due to a rough year with employment challenges and fewer raises seen.
The higher-income consumers are helping to off-set those losses on an overall market basis, as they do have more disposable income this year and their spending confidence is higher than in recent years. The trend of higher-income consumer spending also translates positively for the electronics industry, as leading edge devices (e.g., new Ultrabooks, tablet PCs, smartphones, gaming systems, etc.) have been released and should see positive sales through the remainder of the year.
And those mobile choices support semi gains
The strong adoption of mobile wireless devices by consumers has been supporting the industry for a couple of years now. Recent data from IHS underscore the positive impact of mobile on the sales growth for processors for 2013:
Worldwide processor shipments are forecast to reach 1.50 billion units by the end of this year, up from 1.21 billion in 2012. […]
The first half of the year, in particular, yielded solid growth, up 27 percent in the first quarter on an annual basis, and up 24 percent in the second quarter. Meanwhile, expansion in the third quarter is anticipated at 19 percent, while growth in the fourth-quarter is forecast to come in at 24 percent […].
“The overall processor market would not be so healthy if it weren’t for smartphones and tablets,” said Gerry Xu, senior analyst, processor research for IHS. “The PC market that traditionally drove the growth of the microprocessor segment has slowed. The new mobile platforms have more than picked up the slack, delivering both large volumes and fast growth for processor shipments.”
These are compelling data points and importantly, based on the actual user trends seen over the intense US holiday shopping weekend, the trend is unlikely to slow anytime soon. People are increasingly engaged with their mobile devices and through those devices, rely on new Apps to shop in a targeted manner. These Apps are, in turn, delivered via their mobile devices.
Regardless of the final numbers for the 2013 holiday season, the clear trend of consumers increasingly opting to rely on mobile devices such as tablet PCs and smartphones to shop online or to compare and target purchases, is a positive trend for the semiconductor and electronics industry, as consumer electronic devices are increasingly the point through which shoppers engage with retailers.