By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Dogged by fallout from the events of Sept. 11, and blanketed by an ever-weakening economy, CE accessories company executives were asked how they expected business would hold up in the coming months, and what directions the accessories industry and their own companies would take into 2002.
Although accessories makers generally find fluctuating global conditions tend to cloud their crystal balls, most, despite the tragic tenor of the times, were upbeat concerning expectations for the New Year.
"We all have been affected in our own way by the tragedy of Sept. 11," said Bob Borchardt, president/CEO of Lake Mary, Fla.-based Recoton. "While the events caused major disruptions for the airlines and hotel industry, it also helped sales of many consumer electronics products. These started flying off the shelves as people wanted to have the best picture of what was taking place and sought to communicate quickly and easily where they were."
Borchard continued, "Time and strong marketing efforts have helped restore consumer confidence. However, there appears to be a trend to spend more time at home, and that bodes well for many CE categories."
He added, "CE products continue to be one of the best values. The proliferation of quality CE products at affordable prices, has helped ensure a good holiday selling season and should result in strong sales this coming year."
Prior to Sept. 11, the slowdown in the economy had caused a softening in the computer and consumer electronics accessories businesses, but things worsened after the terrorist attacks, said Mark Naidoff, vice president and general manager of computer/consumer electronics accessories worldwide at Fellowes Manufacturing.
"After a very poor September, accessories sales have begun improving. October sales were still not at the level they should be, but dramatically improved over September. November has started out very well. I am confident that we will continue to show a strong recovery as consumers rebuild their confidence," he said.
All mobile, PDA, cellular and notebook accessories at the Itasca, Ill.-based Fellowes "seem to be the strongest as consumers become very interested in the latest technology products, particularly communications devices," Naidoff said. "Due to the September tragedies and the onset of war, consumers want to be able to communicate anytime anywhere."
Peter Brinkman, marketing director at Fair Lawn, N.J.-based Maxell Corp.of America, said the accessories product category remains extremely robust, as it has for the past several years. "Accessories sales don't really react negatively to economic cycles. In fact, accessories tend to do better in an economic climate that has people postponing big-ticket purchases," he said.
"Consumers in that circumstance tend to buy products that help them maintain and enjoy their home entertainment systems, CDs and movies. These include care and maintenance accessories or maybe a new pair of headphones," Brinkman said.
Brinkman explained that accessories sales also track with product-segment excitement, such as the current escalating popularity of DVDs and the ongoing popularity of CDs, both prerecorded and recordable. Maxell's current CD care and maintenance line is experiencing "very healthy sales increases, which we expect to continue well into 2002," he said.
Not everyone was that upbeat, however. "Our accessories products categories are linked to hardware sales and to the economic climate that had already started to deteriorate prior to the Sept. 11 tragedy," said David Geise, VP Americas, accessories and components for Deptford, N.J.-based Thomson Multimedia. "Looking ahead, we see a tough economic environment for at least the first half of the coming year. Therefore, for us to have a successful business, we have to understand our customer's needs and wants."
"The tragic events of Sept. 11 have had a dramatic impact on businesses as well as consumers," said Michael Golacinski, president of Santa Fe Springs, Calif.-based Memorex Products. "As each of these groups reacts in their [own] way, we believe the following trends will continue for some time.
He continued, "We expect consumers to spend more time at home with their entertainment systems. Within the safety of their homes, they will watch DVD movies and television or enjoy recording and listening to their favorite music."
Golacinski said he expects Americans will continue to turn to their televisions and computers for the latest news and Internet updates. "Moreover, we believe that many Americans will make an enhanced effort to maintain closer contact with family and friends," he said.
On the corporate side, he said, "We are seeing businesses re-evaluate the necessity of having executives travel. Many companies are turning to distance learning and digital video for sales meetings or other presentations that were once performed face-to-face."
He pointed to early trends that are gathering momentum and new buying patterns beginning to emerge. "For example, the expansion of music recording and digital photography continues to accelerate, along with the phenomenal growth of CD-R and CompactFlash media," he added.
"The unsettling events of last September have forever changed the lives of Americans. In spite of these changes — and in some cases because of them — we are seeing greater numbers of consumers and businesses turning to digital technology for new ways to work, play and connect with each other," Golacinski said.
"Given the recent current events, the computer and CE industry has obviously felt the consequences in the marketplace," said Eric Tong, marketing director and product development at Compton, Calif.-based Belkin Components. "While analysts have a pessimistic outlook on the PC industry for the next few quarters, the computer and CE accessories market is still tracking significant growth."
He continued, "The accessories market does not necessarily mirror the PC industry on a 1:1 ratio. With slower growth in PC sales, many consumers look to upgrade their existing machines creating demand for accessories. Moving into the New Year, accessories that create or target innovative solutions for the consumer will succeed."
Kent Shiplet, executive VP of marketing and sales at Oklahoma City-based Jasco Products, noted, "Based on history and a recent consumer study, we strongly believe that the consumer electronics accessories category is positioned for solid growth during 2002. Historically, our company has prospered during economic downturns. This was also true during Desert Storm, and other periods of international conflict."
He added, "Nationally, the Sept. 11 terrorist attack negatively impacted retail sales in September, with some carryover in October. However, it is our belief that most retailers with a good price/value strategy for their customers will have stronger-than-expected accessory sales in November and December this year. The momentum should continue building throughout 2002."
Shiplet said the combination of federal tax reductions and multiple interest rate cuts should stimulate consumer spending in 2002. "Suppliers and retailers of accessory products will no doubt benefit from a rebounding economy," he said.
"Recent Consumer Electronics Association post Sept. 11 research indicates products that provide us news and help us stay in touch will benefit long term. Therefore, telecommunication, computer and video accessories should be hot. In addition, with the strong sales in DVD players, we are seeing a strong resurgence of home theater systems," Shiplet said.
Despite the Sept. 11 tragedy and its effect on the U.S. economy, mobile computing accessories sales at Targus remain strong, according to Brett Johnson, president of Anaheim, Calif.-based Targus and Targus Group International.
"Targus has been buoyed by such products as the ThumbPad keyboard and USB Charge-Sync cable for handheld computers. Diversifying our product offerings by entering into new markets is one of our strategies that will keep us a step ahead of the competition and keep sales strong," he said, adding that Targus' recent introduction of the HandCam digital camera module for the Handspring Visor is a bold step into the digital imaging market.
"And in light of recent events, security is on top of everyone's minds. To address these concerns," said Johnson, "we've just launched the Defcon Authenticator, which is the first of its kind to incorporate a two-port USB hub and connect to a user's computer via the USB port, permitting secure access via an authenticated fingerprint."
"Atlantic remembers Sept. 11 as the day when Americans of all races, colors, genders and religions came together. Some industries since then have shown extreme patriotism by using their talents to give to those whose lives were most affected by the events of Sept. 11," said Don Dolliver, VP sales at the Santa Fe Springs, Calif.-based home storage company.
"The music industry, in particular, took an active role in the healing process. As a result, the music industry placed a positive effect on the accessories category," he said.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.