Thursday, December 10, 2009

When Innovation Lags, Prices Fall

While many are blaming this year's lackluster holiday sales season on the economy (and believe me, I know it's an issue), there's another factor at work here. According to Ebay's CEO, there just aren't very many killer new products that people have to have. In year's past we had new items consumers craved like the Xbox, iPhone, and GPS systems. This year the only new present that seems to be hot is Zhu Zhu. And if you don't have kids, you don't care.

So consequently we're all out looking for a cheaper GPS, a cheaper LCD TV, a cheaper gaming system. It shows in the numbers. This year, according to NPD Group, black Friday sales were up about half a percent, but revenue was down over one percent. Basically, more people were buying cheaper stuff. Meanwhile, parents and grandparents are lining up to pay forty bucks or more for a mechanical hamster (Really? Is this the best we can do?). The lesson here is that people get excited about two things when shopping: New or Deals. If you're not giving them new, be prepared to give them a deal.

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