With the holiday season fast approaching and the econalypse pressing everyone's finances, we're about to have a buying season that's fraught with uncertainty and peril.
Long ago, a macroeconomics professor of mine pointed out to me that in times of global financial stress, the world retreated to three currencies (the reasons are multiple and complex, but it has to do with where the primary economic drivers are). Unfortunately, one of those currencies, the German mark, no longer exists, so we're basically down to two, the dollar and the yen. As Australia and Canada are learning, their currencies are moving with more velocity against the yen than the dollar, which moves in smaller steps when it does move. Thus, we're about to enter into a very strange time for pricing.
Prices are down: With the economy in the dumps and unemployment rapidly rising, there's probably a 10-15% implicit year-to-year demand drop for high end digicam and DSLR cameras already built into the last quarter of this year. Unfortunately, the inventory for this quarter is pretty much already built and in the pipeline headed to dealers. In the US--at least as long as the yen/dollar relationship stays in the 93+ range--that means the camera makers are going to be finding ways to appear to drop prices. For Nikon right now, that means the US$300 instant rebates on the D300 (with lens) and D700 I've talked about before, plus some extra US$100-150 instant rebates if you buy a second telephoto lens with a consumer DSLR kit. The lens deals are a clever way of moving more volume while giving the consumer savings. I suspect that even more price aggression will eventually be necessary to move the volume that the makers have planned for, though (see next article). Cameras without a NikonUSA incentive are showing weakness in price, too. The D3 is now discounted about US$800 by B&H with no incentive from Nikon to do so. This shows the other part of the equation: dealers can't let inventory languish on their shelves, either, as that represents sunk capital costs. Better to move that inventory at little profit and get the money back to invest in something that you can make more profit on. Bottom line: in the US and Japan we're likely to see prices drop on sophisticated cameras and accessories.
Prices are up: This week Canon announced a Canadian$300 price increase on the 5DII before it even shipped in that country. Nikon will be also announcing a Canadian price increase this week, as well. In countries where the currency has rapidly shifted against the yen, price increases are afoot. While Japan is trying to avoid it, this may include Europe if the Euro keeps slipping. This, of course, is a double whammy to demand. With economies everywhere under assault, consumer demand is dropping, but if prices rise, consumer demand will drop faster, aggravating the slowdown. Europe, in particular, seems a likely candidate to see significantly slowing camera sales, more so than other regions (again, see next story for some support).
Canon and Nikon still have very aggressive DSLR unit volume plans, so it will be interesting to see how they manage that. This is perhaps the most challenging time for the camera companies in the past two decades. But it seems clear to me that higher and lower prices are probable, and with little warning and with short lives.
Which brings me to a subject I haven't written about much, but probably need to be more vocal about. There's a lot of "not quite what it seems" on the Internet.
Yes, I'm writing once again about gray market. When markets start splitting direction in currency valuation, gray market tends to be more prevalent. Curiously, this time around, the US isn't likely to be plagued as much by it because of the directions the various currencies are going, but it's still possible here, too. Moreover, because everyone is looking to save money on what we purchase this year, we're more vulnerable to low advertised prices than before. The problem is that gray market providers--I won't get into the outright scammers, who strip out included and necessary parts and sell them to you as accessories--sell you products that don't qualify for NikonUSA warranties, or even repair. If you end up with equipment that needs a repair and you've bought gray, you'll end up paying a lot more in the long run.
Therefore, I urge everyone who's buying via mail order or the Internet this year to do a little extra due diligence. Always look up the company making that too-good-to-be-true offer using one of the many available ratings services, such as ResellerRatings. I'm all for a bargain and think you should look for them too, but use caution and make sure that the place you're ordering from is making a legitimate offer on legitimate equipment.