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Low Electronics Prices Draw Buyers

December 2, 1998

NEW YORK (AP) _ They were novelty items last year, bought mainly by electronics enthusiasts. But now plunging prices are prompting ordinary shoppers to buy gadgets such as DVD players and digital cameras _ leading to optimism that electronics sales this holiday season will be brisker than last year’s spotty shopping.

Manufacturers, particularly the Japanese, are slashing prices more sharply than usual this year in part because slackness in overseas consumer markets is forcing them to try to cheaply unload products in the United States.

At the same time, consumers have more reason to be comfortable about buying some relatively new gizmos. Since DVD players hit the market last year, for example, about 2,000 movie titles have been published on DVD. Digital video disks look like regular CDs but hold seven times more information and are promoted as the replacement to video tapes.

``Things are flying out of stores,″ said David Strasser, a retail analyst with Salomon Smith Barney Inc. ``You’ve got all the products that are now hitting the sweet spot on pricing.″

Among bargains at major retailers since holiday shopping formally began last Friday: VCRs as low as $80, 25 percent off last year’s price; new DVD machines for $300, down from $500; personal computers at just $700, with lots of goodies attached; and a five-CD disk player for $80, down from $120 for a single-disk player.

Those sorts of prices pleasantly surprised shoppers such as Laurie Cags, who was cruising the CompUSA store in midtown Manhattan Monday for a personal computer to help organize her building contracting business.

``Oh God,″ she exclaimed, reacting to a $1,699 pricetag for a Hewlett-Packard PC, monitor and printer that’s also a scanner and fax machine. ``I thought I’d have to spend a little more like $2,000 to $2,500.″

``The prices have gone way down,″ said Paolo Nicosia, who was shopping at the DataVision store in Manhattan for a $100 computer device to let his three home computers share the same printer, monitor and other peripherals. It used to cost $300.

At the Best Buy chain, lines of up to 1,000 customers greeted some stores last Friday, drawn by promotions for a $599 IBM PC that included a printer and $288 DVD players, including 5 free movies and 13 free movie rentals.

Circuit City says its 530 stores saw strong sales for sub-$1,000 computers, digital cameras and $400 DVD players, also including movie giveaways.

Sales at Sears’ consumer electronics departments were strong last Friday but slowed a bit over the weekend, in part because mild weather kept people outside, said Chuck Cebuhar, general manager of home and office electronics. ``It’s a long way to Christmas,″ he noted.

Holiday sales at Tandy Corp.’s 7,000 Radio Shack stores were mixed, said senior vice president of merchandising Rick Borinstein. Shoppers were buying wireless phones but shied away from traditional electronics such as Sony’s Walkman.

Analyst Strasser still believes it will be a good season overall for electronics retailers. He expected Best Buy’s holiday sales to grow by up to 15 percent, Circuit City by up to 9 percent, and Tandy by up to 6 percent.

``This weekend in particular was one of the strongest I’ve seen in recent years,″ agreed David Goldstein, president of Channel Marketing Corp., a consulting and research company that has been tracking electronics sales for 11 years.

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