That's Why They Play The Game
By Steve Smith -- TWICE, 3/18/2002
During the Bear Stearns Annual Retail Conference, held earlier this month in New York, yours truly was in the unfamiliar position of being an interviewee vs. an interviewer. I was a panelist, along with fellow editors who cover the apparel, home furnishings and discount store industries. We were questioned by a Bear Stearns analyst, along with an audience of other securities analysts, about the industries we cover.
After leaving the event two things came to mind. First, after hearing the tales of woe about the apparel business and the condition of some discount stores and department stores, you should be glad that you are in the electronics/appliance businesses.
Second was that based on some of the questions I fielded from the audience, some stock analysts still don't get it when it comes to electronics/appliance retailing. They focus on the quarter to quarter performance of the big guys — Best Buy, Circuit City, Wal-Mart, Home Depot and others — and don't see the big picture. Namely that digital products in CE and upscale appliances should generate profits for the foreseeable future for the big chains and independents.
I also sat in on a presentation during the NATM Buying Group meeting by Adam Levin of Levin Consulting. He has become a regular speaker at the event, reviewing the strengths and strategies of Best Buy, Wal-Mart, Home Depot and Lowe's. In the latter part of his presentation Levin reviewed for NATM members market conditions and how they can effectively compete against national chains.
One of several key points Levin made during his presentation is that those big chains are, sooner rather than later, going to come after the most profitable categories that NATM retailers, and other smaller independents, rely on for profitable sales.
So, Wall Street does not recognize the long-term potential for profitable CE retail sales. On the other hand, a top industry consultant tells NATM that national chains are gunning for them and have all the resources within their means to destroy their businesses.
Both messages shouldn't be new ones to veteran electronics/appliance retailers. For instance, Wall Street never sees the long term in this business.
And as for the battle between national chains and independents in this industry, my reaction is this: So what else is new? This is a long-standing competition. Regional guys aren't the only ones who have problems. Remember Montgomery Ward? How about all of the dot com retailers with plenty of Wall Street money that were going to take over electronics/appliance retailing? And of course Kmart, which now looks like an old bloody heavyweight on the ropes in the late rounds of a championship fight.
On paper, the big guys always look like they should win, and win big. But as they say in sports, "That's why they play the game."
Everything You Ever Wanted To Know About Home Theater…
That could be the title of a new book by long-time CE journalist Mark Fleishmann. Luckily his title is more original: Practical Home Theater (A Guide to Video and Audio Systems). Mark is well qualified to write about this subject. A columnist on home theater for Audio Video Interiors and a co-founder of the popular and dear-departed etown.com, Mark has written an excellent primer for consumers, retailers and manufacturers. The book provides an overview of all the intricacies of the equipment and all the digital changes that, for many of us, generate our livelihoods. Available from www.1stlibrary.com for $17.95 in hardback, $11.95 in paperback and $9.95 in an electronic version, it's both enjoyable and educational at the same time.
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