Hard-up consumers seen seeking solace in gadgets

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"When people don't have much money, they cut on big stuff and buy things that make their lives a little bit better, like consumer electronics," TomTom co-founder Corinne Vigreux said.

Vigreux said she expected the satellite navigation device company to be largely unaffected by the slowing economy in Europe and the United States, but retailers were being "very careful" on inventory levels in the run-up to Christmas.

Consumer electronics makers from around the world have descended on Berlin to showcase their products at the IFA electronics fair which runs from August 29 to September 3.

Many companies count on the fair for new orders as retailers shop for the upcoming holiday season, but are worried that a gloomy macroeconomic environment is casting a pall over sentiment.

"The overall market in 2008 is not very good and Europe is even worse," Shin Ik Kang, president and CEO of LG Digital Display.

A global economic slowdown, oil price increases and the subprime crisis had taken their toll, Kang added.

Euro zone retail sales posted their biggest ever yearly fall in June and British retail sales dropped at their sharpest pace in at least 25 years in August.

Kang expects the TV market in Europe to be flat this year and has seen some reluctance among retailers to place orders since May. Still LG predicts it will outperform the market in Europe.

"We are seeing people are more sensitive to promotional deals but have not seen signs of consumers turning to third-tier brands," said LG Digital Display's Europe head, Chi Eun Lee.

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