Retailers' Prospects Look Good
By Steve Smith -- TWICE, 9/26/2005
The last few weeks of the summer are usually a whirlwind of activity in the consumer electronics and major appliance industries, and this year has not been an exception. Between major buying group meetings and the recently completed CEDIA Expo, there have been plenty of chances for retailers and manufacturers to sit down face-to-face and discuss what the prospects are for the balance of the year.
If anyone can possibly put aside the ongoing human and economic tragedies that Hurricanes Katrina and Rita have wrought, what we have overheard is that consumer demand for electronics and appliances is still booming. The buzz at these meetings was that possibly many categories will not be affected substantially by higher energy costs.
Of course, HDTV manufacturers are moaning that margins for their wares are a lot lower than last year at this time, but few tell you that they are selling tons more than ever before. Asking various suppliers about the situation during CEDIA Expo, a show that is still dominated by custom installers and the mostly upscale suppliers, one manufacturing executive said, “We're more affected if the stock market goes up and down dramatically.”
Of course not everyone is lucky enough to serve that type of clientele. But even three electronics/appliance buying groups TWICE visited recently, whose membership's customers are a lot more middle class and blue collar than the CEDIA crowd, are having great years. For instance, MARTA Cooperative of America reported at its meeting in Arizona recently that positive trends continue: Sales for the 93-member group continue to grow in both electronics and major appliances. More interestingly, MARTA's members are opening more stores, and many locations have increased their comp store sales dramatically.
The Nationwide Marketing Group touted the notion at its Dallas meeting that independents like their members are gaining in major appliance market share for the first time in 25 years. And in CE, independents are positioned well for the fourth quarter and foreseeable future to make money on the growing HDTV market.
Members of Nationwide, and several of the other groups, are better prepared than five, 10 or 25 years ago because their market strategies and buying groups are more sophisticated than ever before. For instance, Nationwide now calls itself the “Nationwide Marketing Group,” a far cry from the days when a buying group's main reason for being was to beat up suppliers to get the best price.
And when you talk about the change in electronics/appliance buying groups, you can't leave out BrandSource, formerly AVB. The group unveiled a new division, Gourmet Source, which will specialize in high-end appliances the same way Home Entertainment Source (HES) handles specialty A/V products. Executive director Bob Lawrence told his members that 2005 is “the best year we have had in 11 years,” and that is across all categories.
Again, the only problem on the horizon is higher energy prices and how consumers will react to home heating and gas pump sticker shock. One top manufacturing executive at CEDIA volunteered what might happen. “Consumers may stay home more, look around and upgrade their electronics for home entertainment.” Or upgrade their kitchen appliances. Either way, that's good news for electronics/appliance retailers.
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