Home Theater Systems are Recession-proof?

Here is an interesting data cut from our recently-released study Consumer Electronics Purchases: Quarterly Monitor. In this survey, we asked respondents in 1,090 U.S. Internet households to tell us which consumer electronics products were most-likely to be purchased in 2008. We then followed up with questions related to their concern about the country's economic situation and whether that would impact their specific purchase intentions.

When you look at the percentage of likely buyers remaining after stripping out those lost because of economic concerns, MP3 players, digital cameras, and personal computers top the list. These are logical findings, as these products tend to have high replacement rates and are commonly gifted. As the MP3 players and digital cameras continue to fall in price, the impact on the consumer's wallet is less severe.

One interesting finding was how home theater purchases are high on the list in terms of more recession-proof. One theory I have (based on qualitative work that we did several years ago) is that consumers view home entertainment as a cost-saver! We talked to consumers who had purchased higher-end home theater systems, and I was really surprised at the people who indicated that they were motivated by cost-savings – spending less money out at the movie theater by bringing the entertainment experience in home. I think that the notion of cocooning also resonates well in hard times. We certainly saw this after 9/11 and the economic slide after the Internet bubble burst. People want to come home, relax, and forget about their troubles!

On the converse, high-definition televisions and high-definition DVD players are less recession-proof. I can certainly understand the consumer mentality. Despite the major decrease in high-definition television prices the past few years, these are still bigger-ticket purchase items. And, although the high-definition DVD format battle has been settled (and we're expecting sales of stand-alone players to grow about three times of what they were in 2007), consumers may view these as optional, particulalry with average price points north of $500, and with lower-cost upconverting DVD players available. The good news for the CE industry is that the tax rebate checks are out there, and we expect them to spur at least some consumer spending. So, the rebates may perform exactly as intended - to offset concerns about the economy and encourage consumers to spend more freely. The Scherfs got their rebate deposited today, and if the e-mail back from my wife is any indication, that check is all but spent already!