Christmas tickle for thin tills

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The retail channel is gearing up for a Christmas sales bonanza, driven largely by a mini boom in gaming hardware and software, digital cameras and low end PCs.

John Slack-Smith, general manager, computers and communications at Harvey Norman, expected the company's sales revenue to increase by up to 20 percent next month compared to December 2001.

Slack-Smith said he was “loving” the sales battle that is taking place between Microsoft's XBox and Sony's PS2 games consoles.

Harvey Norman expected to offload around 25,000 units of the Xbox, PS2 and Nintendo Game Cube in December alone. He said the retailer was “building to a crescendo” in games console sales next month - not a difficult task given that channel researcher Inform claimed the local interactive games market is worth $2 million a day.

Pocket PCs - in particular the new Panasonic GD88 picture phone, digital cameras and price cuts across PC lines from Toshiba, HP, Packard Bell and E-Machines would collectively drive sales growth, he said.

“I think desktop PCs in particular are stronger across the board [in the retail market] this year than they were last year,” he said.

He added that while consumers won't be spending more on PCs, they will get more for their money in December as the top PC vendors fight to compete against Dell Computer's aggressive retail market campaigns.

Slack-Smith expected digital camera sales in December to double over November, which is so far up 40 percent on October.

“December will be the strongest month this financial year [in the computer retail market],” Slack-Smith said.

He added that there is an underlying strength in the consumer IT market at the moment, in contrast to the flat sales environment being experienced by the corporate IT channel. “We've got record number of people walking into our stores. All of our marketing campaigns are locked down and we are throwing everything bar the kitchen sink at marketing for the four weeks of December,” Slack-Smith said.

Harvey Norman supremo Gerry Harvey added that he is looking forward to a stronger Christmas than last year for computer and communications products, but says the market is a long way from breaking any records. “We're hoping it will be a little bit better, because there has been some demand (lately) for notebooks, and some PCs,” Harvey said.

“But we're not back where we were,” he said. “If we were talking in June 2000, we'd be talking about three times the sales.”

One bright spot in the sector was a pick-up in PDA sales, although volumes were not at a level to make up the downturn in PC and notebook sales, Harvey said.

As a proportion of overall Harvey Norman revenue, computer and communications products had fallen from about 33 percent in mid-2000 to about 26 percent today. He said sales of digital cameras and home entertainment products had grown to make up the shortfall in computers product sales.

Ross Whitelaw, managing director at the Leading Edge Group, expected DVD burners, notebooks, speakers and other peripherals such as cameras to be the best sellers next month. “It will be a good Christmas trading period - better than last year,” he said. But Whitelaw couldn't put a finger on why the consumer IT market is seeing such good growth. “If I knew that I'd be a millionaire,” he said.

He said that Leading Edge's regional stores have performed well despite the drought. If the drought continues, Leading Edge expects some regional pain in Q1 next year. “While the drought is there, the effect hasn't hit yet. We're positive - we have a bigger promotional program than in the past,” he said.

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