CE Is Not For The Faint Of Heart
By Steve Smith -- TWICE, 11/11/2002
Trying to predict how consumer electronics sales will be this holiday season is like seeing a mirage in the middle of the desert. It's there one second and gone the next.
Market conditions this season will depend upon on your local economy, who your suppliers are, and whether they can get you enough hot new products at the right price to drive store traffic and sales. There isn't any one trend that will apply to just about everyone. That's why senior editor Alan Wolf uses the word "hazy" to describe the outlook for holiday sales this year. (See p. 14.)
There are a lot of powerful factors both against and for a good selling season, the first being a calendar quirk: fewer shopping days between Thanksgiving and Christmas.
If you want you can find plenty of negative factors: the stock market crash; fear of unemployment; and a possible war with Iraq soon. All have resulted in low consumer confidence. And then there may be possible shortages of key digital products due to the West Coast dock problems. When you mix possible heavy retail price cuts to get consumers into stores to buy the products that are in inventory, the picture you see isn't pretty. One might predict this could be a highly promotional, and almost profitless, holiday season for CE.
But all is not gloom and doom. On the positive side there are those same negative consumer confidence numbers. The October Consumer Confidence Index was bad, but also showed that the percentage of households planning to buy a TV within the next six months has grown.
Last year the Consumer Electronics Association went against the trend and predicted correctly that the CE business would have a good holiday season in 2001. Of course the CEA has a vested interest in backing the industry. But this year's Holiday Purchase Survey (TWICE, Oct. 28, p. 14) reports that 78 percent of all U.S. households will buy a CE product this Christmas. And 44 percent of those surveyed (vs. 29 percent in 2001) said the economy is either better or about the same as the previous year.
Looking at all these reports the old expression "Think globally, act locally," may come to mind to describe this season. You have to be aware of major economic and market forces that may, or may not, affect your business. But more importantly you also have get even closer to your customers and your manufacturers in the coming weeks to find out what the needs of the former are and find out what the latter can realistically supply.
I've learned that the CE business is not for the feint of heart. CE retailers, as well as manufacturers, are optimists. They have to be, because even in the best of times there is enough negative factors out there to keep you in bed and under the covers each morning.
EDITOR'S NOTE: Next week, Nov. 18, we will publish the TWICE Business Annual, reviewing key industry statistics for this year. The next regular issue of TWICE will be published Dec. 9. For breaking news check www.TWICE.com.
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