Vendors Arrive Upbeat

By John Laposky On Jan 7 2008 - 8:00am

As was the case in recent years, the accessories category enjoyed a very healthy 2007 when it came to sales, and most of the executives contacted by TWICE in the days leading up to International CES saw good days ahead in 2008.

Solid margins and an efficient cycling of add-on options in the wake of new hardware introductions has spurred retailers to pay more attention to the various accessories categories and, in many cases, devote more shelf and warehouse space to them, according to a number of the 30 executives who weighed in with their opinions.

The most often-mentioned "hot" categories ranged from iPod, iPhone and MP3 products, to HDTV accessories such as HDMI cables and flat-panel mounting hardware, to laptop computer accessories.

"We're seeing significant growth coming from the accessories in [the laptop] space, driven by innovative case-good designs and technology that allow for the easy integration of a laptop into the house — especially in the non-traditional environments in the home," said Chris McGugan, product management VP at Belkin.

Indeed, as the laptop becomes more common in households, peripherals that increase its usability and convenience are in higher demand. And those that take advantage of the hugely popular social networking and online entertainment content trends are particularly well positioned for the coming months and years.

"At Shure, we're poised for explosive demand for home recording/DIY gear for consumers. Ever-increasing numbers of amateurs are seeking USB microphones and recording solutions for home-media centers or recording studios. That demand, along with increased ease of self-promotion through YouTube, MySpace and Facebook, has proven that everyone wants to be a star," said Mark Karnes, executive director, global marketing executive director for Shure.

Increased laptop use is also driving growth in the home networking and home entertainment categories, with USB hubs and port replicators keeping pace with increased demand for PC speakers and portable storage devices.

The popularity of VoIP calling and video messaging are also having a positive residual effect on laptop and PC accessories sales of items such as headsets, wireless keyboards and mice, and Web cam replacements.

Looking ahead to 2008, David Geise, president of Audiovox Accessories, pointed out two positive developments that will affect the accessories business. "With the current eco-friendly environment, we expect to see an influx of low-energy-consumption products or new technologies that enable home energy conservation," Geise said. "Additionally, the digital TV transition will put renewed attention on off-air reception products such as antennas, especially if they are paired with the new digital converter boxes. New ways to distribute content throughout the home be it digital music, movies or user generated video will also be a driver.

For Jasco, 2008 will be all about wireless. "Wireless technologies will continue to drive the business forward. Jasco is offering a new Bluetooth ecosystem of products for consumer electronics, Z-Wave wireless lighting controls for home automation, and Wi-Fi-friendly wireless cameras for home monitoring," said Cameron Trice, marketing and product development senior VP.

Another industry dynamic that should have a direct impact on accessories sales going forward is the changing business model of the celllular industry, though the effects may not be felt until next year.

"While we'll only begin to the see the revenue impact of this in late 2008, the move towards more open wireless networks allowing access from all types of devices will open up revenue possibilities beyond the specifics of what we can imagine right now," said Adam Guy, telecommunications and media GM for Compete. "First, though, developers and programmers need to start dreaming up what they can do with that access so consumers can make the final call on which services they want, and which ones they are willing to pay for."

One wild card for the industry is the effect of macroeconomic trends on retail sales. The credit and banking crisis, the weak dollar and the housing slump could cast a longer shadow in 2008.

"We don't expect that these factors will have much effect on premium goods. However, there will be price pressure on replacement products such as remotes and antennas, surge and headphones as consumer feel the pinch on discretionary income," Geise said.

But as David Henry, customer experience senior VP at Logitech, countered: "Because our products are affordable luxuries, they are quite popular when consumers are watching their budgets."

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