'Brown Goods' Are History
Steve Smith -- TWICE, 2/25/2002
Brown Goods and White Goods. Those two nicknames for consumer electronics and major appliances were ancient even when I started covering the industry 20 years ago. People in the business still use the old nicknames today when talking about product mix, overall sales and retailing in general.
So when I saw the headline "Brown Goods Are History" during the Nationwide TV & Appliance's PrimeTime meeting in Orlando (see p. 1) I did a double take. The headline appeared in Nationwide's magazine for its members, Independent Thinking. But the full headline and deck is: "Brown Goods Are History. Long Live the Digital Revolution! It's Not Your Father's Consumer Electronics Business Anymore."
The story, written by Steve Bryant with contributions from Murray Provine, Jim Stiener, Terry Callendar and CEA, is an attempt by Nationwide's management to get its electronics/appliance retailers interested in CE again.
The story outlines the many profitable opportunities for independent retailers in selling digital TV, satellite systems, upscale DVD players, home theater and home-theater-in-a-box systems, and the like.
The problem is that most Nationwide dealers really aren't 'electronics/appliance retailers.' That's a misnomer. Nationwide director Ed Kelly said that the group's current product mix is about 69 percent appliances and about 20 percent CE, with the balance being furniture. Nationwide's members, as well as probably most of the members of the MARTA Cooperative of America, Brand Source/AVB and Best Brands Plus, would be more accurately described as being 'appliance/electronics' retailers.
Years ago most of these family-run independent dealers moved out of most CE categories. That was due to the predatory pricing in CE business, as well as the years' little innovation in the industry between the mid-80s and mid-90s when the industry was waiting for "the next VCR." The dominance of national chains didn't help either.
The time is ripe for independents to become factors in the CE again. We all know the torrent of digital products that are being introduced each year all need to be sold in the right environment. And they need retailers that have knowledgeable, well-trained salespeople who can guide consumers through the maze of technology.
At the same time independents are looking to diversify their product lineup due to the change in the once-stable and very profitable major appliance business, in which Home Depot and Lowe's have made more of a dogfight.
More than once over the past couple of years I've heard industry executives say, "If you can sell high-end appliances, you can sell digital TVs." Nationwide's Ed Kelly adds that many of his members are "planning to change their stores to do it." And he added a warning: "The scary thing for us is, are our members prepared to sell these products?"
Well Nationwide is gearing up training programs for its membership. And the North American Retail Dealers Association (NARDA) is beginning to interview candidates for its NARDA 21st Century Retail Vision retail training program, which not only provides product training, but overall business courses as well. (See p. 4.) For its part, manufacturers should join in and do more in sales training for retailers such as these.
A turn towards having independent dealers in selling digital consumer electronics might seem like a "Back to the Future" move by some. But if independents do become more of a factor in the CE business it could mean more profits for those retailers and CE manufacturers.
(Hmm… higher margins for CE products. Maybe that is a "Back to the Future" move, and a pleasant one at that.)
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