August sales showed some sequential price declines with prices down 2 percent from July, the sharpest decline since May. Compared to the same period last year, August 2004 prices were down 16 percent. The overall price level fell below $12,000 for the first time, with the total price for the Price Watch basket of goods hitting $11,979.
“The high sequential price decline shows that August is an important selling month with deals and value being key selling points to drive merchandise sales for the back-to-school season,” said Stephen Baker, director of industry analysis for The NPD Group. “However, the fact that overall price declines in August were moderate compared to other months this year seems to indicate that back-to-school activities do not set long-term trends in pricing and that the month is more directed toward driving volume.”
Only one product fell by 10 percent during the month of August. The basic DVD player fell 16 percent from July levels to $46.61. Both 20GB music players and progressive scan DVD player prices were down slightly more than 5 percent from July. Interestingly, prices of 20GB music players, which were down 7 percent from July, were up almost 12 percent from last August.
“The iPod effect is very much in evidence as Apple’s $100 price reduction in its 20GB player to $299 helped drive prices down more than $75 over the past two months,” Baker added. “While pricing is higher than last summer, Apple had no product in this segment last year as it was shipping only 10, 15 and 30GB models and the only entrants were products from Archos and Creative.”
About 25 percent of the items in the Price Watch basket saw increases from July to August. This group of products was led by home audio products, including home theater all-in-one systems and AV receivers. Home theater all-in-one systems saw prices jump 8 percent to just over $300 and AV receivers had an ASP of $361, an increase of 4 percent from July.
The average price of Plasma TVs fell over $100 from July, while notebook PCs fell nearly $45 during the same period. Dollar increases besides those were limited although home theater all-in-one systems’, $22 increase over July prices, gave it the sharpest percentage increase of any product in the basket giving it the leading percentage increase.
Since the start of Price Watch in January 2003, overall prices for the basket of goods has fallen 29 percent, or nearly $5,000. Twenty-four of the 27 items in the Price Watch basket have fallen by more than 10 percent in average selling price. In this time period only one product has registered a price increase – the basic desktop PC, which now sells for an average of $721 versus its January 2003 price of $705.