Consumer Electronics Sales Slowing

Friday, January 26th 2001, 12:00 am

By: News On 6

NEW YORK (AP) â€” Sales of consumer electronics, excluding computer-related merchandise, may have increased 5.1 percent last year, but dropping prices and a souring economy that resulted in consumers pulling back on purchases took a toll on the industry during the last half, according to a study released on Thursday.

For 2000, revenues from consumer electronics, such as CD players and personal video recorders, at mass merchants and specialty chains, totaled $28.3 billion, from $26.9 billion in 1999, according to NPD Intelect, a subsidiary of Port Washington, N.Y.-based market research firm NPD Group.

The total number of units sold rose 7.1 percent to 283.9 million, from 265.2 million in 1999, the study revealed.

However, sales weakened considerably in the last two quarters. Revenue was up 9.1 percent in the first quarter and 10.2 percent in the second quarter, compared with the year-ago periods, but slowed to 3.4 percent in the third quarter and 2.2 percent in the fourth quarter.

The price wars, which reached a crescendo during the holiday season, where Wal-Mart Stores Inc. and other discounters peddled $99 DVD players, clearly had a negative impact.

NPD Intelect noted that the average retail price of a DVD player last year plummeted 30 percent, to $222, from $317 in 1999. The average price of audio CD recorders declined 14 percent to $438 from $508. Meanwhile, car stereos on dash boards saw its average ticket price drop 8 percent, reaching $184, from $200.

Competition from mass merchants caused headaches for specialty chains such as Best Buy Co., and Circuit City Stores Inc., both of which resorted to heavy discounting and promotional rebates to pump up, a move that eroded profits.

``Once prices fall, it is hard to raise them again â€” unless there's significant new technology,'' said Jim Hirschberg, director of consumer electronics at NPD Intelect.

Take, for example, home theater boxes â€” an audio set that has five speakers. It saw its average price rise to $435 last year, from $368, as manufacturers added DVD players to the product as an extra feature.

Hirschberg said he's heartened by a wave of new products and features that could pump up interest in consumer electronics this year, like CD recorders that have hard drives, allowing consumer to store CDs.