After two years of near-spectacular growth, the consumer electronics business is settling onto "a plateau of solid, consistent improvement" as it matures, according to the Electronic Industries Association's economic outlook.
While the industry's factory sales climbed nearly 10 percent last year to $22.8 billion, that is "far less than the 24 percent increase in 1983," said William E. Boss, a top RCA Consumer Electronics executive. The industry enjoyed a similar 24 percent growth rate in 1982.
For 1985, the EIA is now forecasting an industry growth rate of "around 9 percent, to $24.9 billion at the factory level, or more than $34 billion at retail."
Despite the industry's continuing growth, both retailers and manufacturers here at the Winter Consumer Electronics Show expressed concern about their eroding profit margins and declining profitability.
"Our fourth-quarter profits were down at least 20 percent from the preceding year," said Steve Conn, president of International Discount Mart, a Los Angeles-based consumer electronics store.
Consumer electronics traditionally has been a high-volume, low-margin business. Although many retailers enjoyed higher-than-average dollar sales and unit sales this Christmas, they said margins were lower than expected and that their profitability suffered as a result.
The industry's projected slower growth rate is making retailers jittery about making up in volume what they are losing in margin, and thus more selective about what products they choose here.
There is even concern about videocassette recorders, the hottest growth category in consumer electronics last year with roughly 7.3 million units sold, an 80 percent increase over the 1983 level.
The average VCR price dropped from $528 in 1983 to $467 last year, the EIA said. Further price cutting and low-cost competition from South Korea is expected to push that figure below $447 this year. The association projects VCR sales growth at a 30 percent rate for 1985.
Sales of compact audio-disc players -- a technology that uses laser beams to play high-quality, digitally recorded music on special records -- jumped from 35,000 units in 1983 to roughly 225,000 units last year. This year, more than 400,000 compact disc units are expected to be sold as prices drop below $300 and portable players go on the market.
On the other hand, sales of home computers -- once the hot growth area in consumer electronics -- leveled off last year at roughly a 6 percent growth rate. Sales of machines costing less than $2,000 rose from nearly 4.8 million units to retailers in 1983 to about 5.1 million units last year. The EIA anticipates that 6 million home computers will be sold this year and that consumers will be willing to pay more for them to get added power and more functions.
"We were 20 percent ahead in unit sales last quarter over last year," said Charles McKennan, president of Leon's Computer Mart in Rochester, N.Y. "We were up 7 percent in revenues but down 4 percent in margins, so it was almost like running in place for us."
McKennan is counting on a spate of new products to revive home computer profits.
Many in the home computer industry argue that the success of VCRs and the revived record industry took away dollars from their business.
"VCRs definitely hurt personal computers," said William H. Bowman, chairman of Spinnaker Software, a Boston-based home computer software company.
With a disappointing number of home computers sold last year, software companies enjoyed far slower growth than they expected and suffered losses as they glutted the market with discount software. The last Winter Consumer Electronics Show featured exhibitions by more than 130 home software companies. This show has barely 100 exhibitors.
"Nineteen eighty-four was a shakeout year," Bowman said. "Nineteen eighty-five will be a building year. We're looking for 1986 to be our year."
"Nobody did as well as they'd hoped," said Jack Rosen, vice president of marketing for CBS Software. "Our Christmas was 20 percent off" expectations.
Rosen declined to project the industry's growth for this year. "I have given up predicting because the research is always wrong," he said.
Despite shakeouts and consolidations in several categories, the show featured a variety of innovative products, especially in video, for the more than 100,000 visitors.
All of the major television manufacturers are showing stereo TV sets capable of playing programs broadcast in stereo sound. Several companies have introduced pocket TV sets -- most notably Casio, a Japanese company that has priced its 1 1/2-inch black and white set at $99.95.
Both Atari and Commodore International have introduced new computers and computer peripherals, and more audio companies are aggressively pushing portable compact audio-disc players that cost less than $500.