Retail Consumer electronics strong...........................................
twice.virtualmarketing.com
Dealers Upbeat On Holidays - -December 8, 1997
By Jill Bilzi
Encouraged by strong early sales returns, key retailing executives across the country told TWICE they have their fingers crossed that this Christmas will be substantially stronger than the past two disappointing holiday seasons.
As crunch time was bearing down on retailers nationwide, pre-Thanksgiving sales figures were better than last year in many parts of the country. Particularly strong sales were recorded for 32"-and-larger direct-view TVs, projection TVs, direct-to-home satellite systems, DVD players and Dolby Digital audio products.
The obvious hope among retailers is that the early tide of shoppers is a positive bellwether for a truly merry Christmas -- something most dealers want so badly they can taste it.
"I think we're definitely going to have a better Christmas than in '95 and '96," said Jerry Dreyer, executive director of the MARTA Cooperative buying group. "We're seeing a real resurgence with DSS, which is good news."
Also strong for MARTA dealers in late November, according to Dreyer, were 32"-and-larger TVs, projection TVs, and home theater systems.
But, Dreyer adds, because most retailers in MARTA carry primarily appliances, the group's strong growth in home theater products -- which is above the industry growth rate in that category -- is a reflection of many of his members "playing catch up" with other dealers who have been selling home theater systems for a long time.
Several retailers in the West, Southwest and in Texas said the surge in DSS sales in mid- to late-November may have been due in part to the success of the JVC/EchoStar deal Sears signed, which one dealer said served to "legitimize the whole direct-broadcast satellite category."
Retailers reported there were product shortages in late November on several popular models of direct-to-home satellite systems. There were also back-orders for high-end DVD players from Sony and Pioneer and, nationwide, a shortage of 25" TVs, an apparent result of manufacturers underestimating the strength and legs of that category.
Many retailers said they were actually surprised this year by the amount of early customer traffic in stores.
"We started to see a little loosening up in electronics about mid-November," said Charles Palko, VP appliances for the Ohio-based Roberds chain. "Appliances continue to be strong, but they're a replacement business, not typically a gift-giving item."
At American Appliance, the 30-store independent chain based in Pennsauken, N.J., sales of 32"-and-larger TVs have been positively "robust," according to Walt Koval, marketing/advertising director for the retailer.
"I'd say we definitely have seen positive momentum on the brown goods side," Koval said. "It really has surprised us, we're delighted."
Warren Mann, group director of the NATM buying organization, said both white goods and brown goods are moving early this holiday season -- something he hasn't seen happen in a long time.
"Our guys are saying things are starting to move again," Mann said of NATM's members, "but let's remember that it's quite possible for one of our stores that sold, let's say, $10,000 last year to do $12,000 this year -- meaning they gained market share -- and still make less money this year."
Price erosion and razor-thin margins are clearly top-of-mind among retailers, and many of them bemoaned the fact that 27" TVs helped fuel Christmas sales last year, but 12 short months later 27" sets are being used as loss leaders in many parts of the country.
"This year, 27" TVs became a commodity because they were crushed down by falling prices on 32" TVs," Mann said. "Now 32" TVs are selling for $439, and they're being crushed down by $699 on a 35" model."
Many retailers say their critical sales growth is now in the 32"-and-larger set sizes. But several dealers are concerned that the anticipated consumer press coverage of HDTV at the upcoming International CES in Las Vegas will once again jeopardize all big-screen analog TV sales.
"Some of our dealers believe that customers are still staying away because of the whole HDTV issue," Dreyer said. "I think CEMA needs to do a better job of educating consumers about HDTV."
Sandy Bloomberg, chairman/CEO of New England Audio, the parent company of Tweeter etc. and Bryn Mawr Stereo, voiced similar worries.
"We're actually seeing, finally, a rebound in projection TVs after the spring slowdown," Bloomberg said. "But we're bracing ourselves for a slowdown in big-screen sales right after CES when all the reporters from Time, Newsweek, CNN and ABC tell consumers -- incorrectly -- that HDTV will be on the shelves 'later this year.' "
In terms of holiday sales, Bloomberg reports business in New England has been "exploding," due, in part, to Montgomery Ward's closing of its Lechmere stores throughout the region.
"We're anticipating a pretty good Christmas," Bloomberg said. "In fact, our expectation is to have a sensational Christmas."
Among the items Bloomberg said are selling well already this holiday season are step-up audio SKUs, including Dolby Digital and AC-3 items.
Sales of DVD players at New England Audio are also stronger than industry sales rates, according to Bloomberg, although he adds that like many retailers, he is desperately seeking the heavily back-ordered higher-end DVD players from Pioneer and Sony.
Bloomberg said he expects digital camcorders to turn in strong numbers this holiday season, as well as traditional gift-giving electronics such as portable CD players and shelf systems. Also, "we see digital audio products doing well, overall. It's a digital Christmas for us."
Koval of American Appliance said his chain has seen "a positive bump" in sales of build-to-order personal computer systems.
The retailer, which already carries desktop computers from Compaq, Hewlett-Packard and Packard Bell, recently added a new value-priced, build-to-order line from Proteva. The varied lineup of SKUs can each be customized for a consumer's specific needs, and the finished unit is delivered complete to the purchaser within seven days of the sale.
"It's a way we can compete with Gateway and Dell," Koval said of the new Proteva build-to-order line.
One thing retailers say they are not too worried about is that potential customers, particularly baby boomers, will be reluctant to open their pocketbooks this Christmas season in the wake of the stock market plunge in October. Several dealers said they were encouraged by news surveys that found the vast majority of stock owners chose to ride out the topsy-turvy week on Wall Street, rather than sell off their stock portfolios in a panic.
"If it turns out we have another really slow and disappointing Christmas again this year, I think we have to face the fact that we're dealing with a saturation issue more than people simply holding onto their money," Dreyer of MARTA said. "Look, the economy is great and we have the lowest unemployment rate we've had in 20 years. It may be people are just asking themselves, 'How many more TVs do I need? How many more VCRs do I need? How many more cellphones do I need?' "
NATM's Mann thinks people might buy more at retail this year because they are less worried about being the victim of corporate downsizing, and consumers may also be getting Christmas bonuses for the first time in a long while.
"Employment is so high right now there's a pretty good chance that employers will be giving some great holiday incentives to keep good people," said Mann. "Hey, people may be feeling more flush than they have in the past two Christmases."
Larry Wien, VP of Al & Ed's Autosound, the 27-store mobile electronics chain based in Monterey Park, Calif., said he also believes this Christmas will be a merry one for his chain. When asked why, Wien gave perhaps the most concise and intuitive answer of all the retailers interviewed for this report: "It's going to be a great Christmas. I just feel it in my gut." |
