Good Riddance
By Steve Smith -- TWICE, 12/17/2001
When describing the nature of the consumer electronics industry to the uninitiated, I always say that there is usually enough change, excitement and adventure in an average year to make it feel like you've gone through four years instead of the usual 12-month variety.
This year has felt at least like a dozen since International CES opened last January in Las Vegas — for obvious reasons. There was the world before Sept. 11 and the world after it, and the first eight months and ten days of 2001 seem light years away from where we are now.
This column is not the venue to discuss the repercussions of the catastrophic loss of life, and its aftermath. But this is the proper place to discuss how this new world is affecting the consumer electronics industry.
When you look at our retail year in review story (see p. 16), you will see that signs of a slowdown appeared during the first quarter, or eleven prime rate cuts ago. Lucky retailers had sales that were flat or a couple of points higher than last year by June. Many more were showing slower sales vs. last year.
The stock markets gradually went bust, yet consumers received President Bush's tax rebate and began spending those checks as the summer ended. Many retailers thought that the fourth quarter would rebound and save the year.
Then the unthinkable happened.
The nation was in shock. Stores were closed nationwide for at least a day or two, and many people just stopped shopping for a week or two after the attacks. Hundreds of thousands lost their jobs, especially in the tourism and retail trades, as many consumers decide to stay home instead of traveling or shopping the way they once did.
But many of those layoffs would have happened, whether or not Sept. 11 became forever linked with Dec. 7. We were in a recession during 2001. Hell, as of this writing, we still are in that recession and it may continue for a few more months. We all remember the Cold War economy, and we are now faced with a terrorist war economy, where more of our national resources will be invested in security.
Parochially, what does this mean for the consumer electronics business? From this reporter's view, the fundamental strength of the industry is sound. Granted, there are plenty of digital products available now and on the horizon, but that doesn't mean the industry will make 50 percent margins. It never has. But early indications show that consumer electronics, including video games, are leading the way in holiday sales.
CEA president Gary Shapiro said soon after the terrorist attacks that the strength of the consumer electronics industry is that its products help people inform, entertain and communicate with one another. That basic strength, mixed with the strong value these products provide, has historically drawn consumers to this industry, continues to do so now, and should continue to do so in the future.
This is the final issue of TWICE for 2001. From now until our first issue of 2002, Jan. 8, when we preview the goings on at International CES and kick off that day in Las Vegas, log on to www.TWICE.com for news updates. From all of us at TWICE have a happy holiday season and a healthy New Year.
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