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A shift in consumer preferences to smaller, easier-to-use technology is hurting big retailers like Best Buy, who have seen sales fall as demand drops for their big display items.

Consumers are less frequently buying televisions and other big-ticket items that often require more research and assistance to install, favoring notebook computers and electronic readers in a trend expected to continue in the latter half of the year.

“People are spending on gadgets before they’re even spending on clothing,” said Patty Edwards, founder of wealth management firm Storehouse Partners, referring to smaller handheld devices. “But … the brand new TVs, not so much. In this economy, you can’t expect that the migration to even the 3-D TVs is really going to be that big of a deal.”

“(Best Buy) has not evolved as quickly, I think, as they should have,” Edwards said. “But frankly, throughout this downturn, very few retailers have.”

Best Buy has said televisions, as well as video game and music sales, did poorly in recent months, crimping sales and profits for its first quarter.

And for more than a year, analysts have questioned whether Best Buy’s investments in stores and customer support would translate into higher sales and help it fight steep discounts at rivals like Wal-Mart Stores Inc and Amazon.com Inc.

“Consumers are sensitive to price more than anything else in the consumer electronics business,” said R.J. Hottovy, a Morningstar analyst who covers Best Buy. “There’s anecdotal evidence out there that a lot of people will go into Best Buy just to see the latest products but ultimately buy their products somewhere else.”

Best Buy is not the only retailer feeling the pain. Discounters and warehouse clubs like Target, Costco and BJ’s Warehouse said in monthly sales reports that demand was low for electronics, particularly televisions, causing some retailers to miss their own forecasts for June. Best Buy did not report monthly sales.

The U.S. Census Bureau’s monthly retail report for June showed electronic sales rose 1.3 percent from May and 7.3 percent from June 2009, indicating to analysts that consumers are still spending on electronics but for different items.

“When you see these kinds of disconnects, it’s largely driven by the fact that consumer preferences are changing,” said Shawn DuBravac, chief economist and research director at the Consumer Electronics Association.

“What it shows is that the tech sector can change rapidly, and retailers are in an ever state of flux trying to keep up,” DuBravac said.

APPLE TIES

Best Buy does have the benefit of being the only retailer besides Apple stores to distribute some of the newest products. The iPad and iPhone 4 were some of the biggest releases in the last few months, which could be a boon to Best Buy, said Steve Baker of market research firm NPD.

But other analysts said Best Buy’s sales of those products were limited compared to orders directly from Apple or through Apple retail stores, and sales of personal computers and netbooks also have been weak.

“For my money, I’d rather own Apple than Best Buy,” Edwards said. “All dollars flow back to Apple. Not everyone who buys an iPhone has to go to Best Buy.”

And reception problems tied to the iPhone 4 may also weigh on Best Buy’s alliance with Apple. Shares in Best Buy fell 3.7 percent on Friday as Apple made a public statement to appease iPhone users and new data showed consumer sentiment at an 11-month low.

Jefferies analysts cited a lack of new products as a cause for downgrading its Best Buy rating to “hold” in a note last week. Eleven of 30 analysts polled list Best Buy a “buy”, four rate it a “strong buy” and 15 rate it “hold”.

Analysts were also not optimistic about back-to-school sales, although they said expected releases of PC tablet computers and 3-D video games could help some.

“Retailers are struggling to give consumers reasons to spend right now,” Hottovy said. “We’re still dealing with a difficult economy, and it’s not enough to drive consumers into stores.”