Consumer Electronics Show to be scaled back

The Consumer Electronics Show in Las Vegas will be toned down this year because of the slumping economy. (Getty Images file photo)

The Consumer Electronics Show in Las Vegas — known in years past for its outsized booths, wall-to-wall crowds and lobster dinners — is going to be a lot tamer in January.

The show’s producers are expecting a 10 percent drop in attendance to about 130,000 people, down from 141,000 in January 2008.

Companies such as Cisco Systems Inc., Panasonic Corp., Seagate Technology, Belkin International Inc. and Sony Corp. are sending fewer people, eliminating show floor booths in favor of less expensive hotel suites or retooling their marketing message to fit somber economic times.

Hotels, normally booked solid months in advance, recently offered promotions and discounts to fill empty rooms just weeks before the show, which runs Jan. 8-11.

While some attendees are looking forward to shorter taxi lines and cheaper accommodations, the shift in the show’s tenor is an indication of how the recession is affecting the $173 billion consumer electronics industry, which has enjoyed uninterrupted annual sales growth for the past decade.

In December, the Consumer Electronics Association, the industry trade group that has staged CES for the past 42 years, revised its forecast of U.S. consumer electronics sales for the fourth quarter, from a 3.5 percent growth rate to 0.1 percent.

While U.S. sales of devices are still expected to grow 7 percent overall in 2008, consumers in recent weeks have significantly shifted how they spend money, said Jason Oxman, CEA’s senior vice president of industry affairs.

“Although unit volume largely held up so far this quarter, price declines were steeper than we had anticipated, particularly over Black Friday weekend,” Oxman said. “Consumers were switching to smaller, less-expensive products.”

In January 2008, half of all flat-panel television sets sold in the U.S. were 32 inches or bigger, according to CEA. But in November, that declined to 36 percent.

The trade group expects some products to do well this holiday, including game consoles, GPS devices, mobile phones and digital cameras. But the industry’s biggest category, which includes TVs and stereos, is expected to drop 5 percent this quarter.

That spells tough times for a sector that gets nearly one-fifth of its revenue from TV sales.

Consumer electronics retailers are feeling the pain. Circuit City Stores Inc. filed for Chapter 11 bankruptcy in November and said it would close 155 of its 700 stores by the end of the year. Tweeter, an electronics retailer based in Canton, Mass., liquidated its 94 stores in November.

Even Best Buy, the healthiest of the retailers, posted a 5 percent slump in same-store sales and a 77 percent drop in profit its third quarter ending Nov. 29. Last week it offered voluntary severance packages to almost all of its 4,000 corporate employees.

In response to the pressure on retailers, CEA has for the first time set aside $1 million to help defray travel and hotel costs for thousands of retail buyers, the folks who decide which products stores will sell.

Individual manufacturers are also rushing to aid hobbled merchants. Belkin, the Compton-based maker of iPod peripherals and computer peripherals, is cutting back its spending at CES and using the savings to fund joint promotions in 2009 to drive consumers into stores.

Belkin spokeswoman Melody Chalaban said the company would send half as many employees to CES as it did in past years and would forego an elaborate booth in favor of meetings in hotel suites.

“We’ve exhibited at CES for as long as I remember,” she said. “It is safe to say we’ll be saving several hundred-thousand dollars by doing this.”

Panasonic, one of the first exhibitors at CES and among its largest, said it would eschew skits and comedy routines at its booth in favor of pragmatic presentations to help retailers sell the products.

“We don’t think this economic environment is a time for song, dance and entertainment,” said Bob Greenberg, Panasonic’s vice president of brand marketing.

Other companies will have similarly somber approach to CES, said Kurt Scherf, vice president at Parks Associates, a technology consulting company in Dallas.

“CES will be much more strategic for companies,” Scherf said. “Employees are being sent with very specific goals. The idea of attending just to see a bunch of cool stuff is not going to play very well in this economy.”

Cisco, for example, canceled plans for an exhibit on the show floor and instead plans to hold meetings at the Venetian Hotel.

“We will have the same number of meetings and product demonstrations, but in a less public venue,” said Ken Wirth, vice president of consumer marketing for the San Jose-based technology company. “Our activities at CES will be much more targeted.”

CEA says it has no problem with austerity. That’s partly because over-the-top displays helped kill Comdex, the Big Kahuna of tech conventions that imploded after its 2003 show. Companies, struggling to recover from the dot-com crash, balked at spending money on a trade show that had gotten too big to manage.

In that sense, CEA said it welcomes the drop in attendance, which peaked in 2006 with more than 152,000 people.

“We’re trying to manage the size of the show so that it will be easier to navigate,” Oxman said.

The group charges a $100 registration fee for those who sign up after Nov. 1 to discourage people who don’t work in the industry.

“The value proposition we make is that you can meet the entire consumer electronics industry in one place, at one time,” Oxman said. “The average attendee last year held 12 meetings at CES.”

Such meetings, will continue to form the bedrock of CES, analysts said — even if they’re not held in elaborately lit booths with a nonstop lineup of Vegas show entertainment.

“This is still the largest technology show we have in the U.S.,” said Tim Bajarin of Creative Strategies in Campbell. “Attendance may be down, but its impact will be just as important as ever.”