Global Retailers: Convergence Will Transform CE

BY ALAN WOLF

Digital convergence and connectivity will help stimulate business and will also lead to profound changes in the way consumers shop, communicate and conduct their lives, according to top executives from Wal-Mart, Best Buy, Systemax and India's massive X-cite chain.

During an executive retail panel held every other year at International CES, leading merchants agreed more often than not on key issues impacting CE retailing. This year's session, “Global Perspective on Retail,” was once again moderated by Gary Shapiro, president/CEO of the Consumer Electronics Association (CEA).

The digital interplay between the “three screens” — TVs, computers and mobile phones — represent a “fantastic change” in technology that will drive significant growth, but will also radically alter the way consumers manage their lives, said Gary Severson, senior VP and general manager for entertainment at Wal-Mart.

Fortunately, observed Best Buy CEO Brian Dunn, last year's analog-to-digital broadcast transition was “a great exercise in change management that paves the way ahead.”

Severson agreed that the digital transition “taught us we can do hard change.” While it wasn't without its bumps for Wal-Mart, “It brought energy to a category, a new experience to customers and brought technology to the forefront,” making it well-worth the challenges at the end of the day, he said.

Shapiro, who had pushed for the switch to digital broadcasting for 15 years, took pride in the industry's accomplishment and quipped that the ratio of his headstone will be 16:9.

Each of the panelists was also high on 3D and Internet-connected TV. Gilbert Fiorentino, chief executive of Systemax's technology products group, with responsibility for TigerDirect, CompUSA and CircuitCity.com, said gaming enthusiasts will likely be the first to adopt 3D as the industry sorts out pricing and a merchandising strategy for glasses.

Severson said TV innovations like LED, IPTV and 3D TV will help foster demand now that “some of the bloom is off the rose of flat panel.” But while broadcast announcements by companies including DirecTV and ESPN “lend legitimacy” to 3D, the concept won't truly excel until the industry can deliver “a fantastic experience without glasses,” he argued.

Dunn disagreed, noting that the stunning success of “Avatar” in theaters demonstrated that the 3D experience is “quite compelling and commercially robust.” Dunn also described 3D glasses as “a fantastic accessory opportunity” that will soon include designer brands. “There will be cool glasses,” he promised. “These are not your father's 3D glasses.”

Srikant Gokhale, CEO of X-cite, said another major growth opportunity lies in energy-efficient CE, citing a solar-powered mobile phone he saw demonstrated on the CES show floor.

Fiorentino said the higher cost of environmentally-friendly “green” products represents a consumer tax that shoppers were unwilling to pay during the depths of the recession. Severson agreed that customers “shouldn't have to pay a premium” for green CE, which amounts to a penalty, and said the cost of earth-friendly goods and packaging can be driven down through scale, supply-chain efficiencies and consistent government regulations.

Dunn said the industry can play a big role in collecting and processing end-of-life products, and needs to “triangulate” around the customer, who is ultimately responsible for turning them in.

Dunn also warned that recycling is a growing issue, as consumers are now upgrading and replacing their TVs every five years due to the increased pace of innovation.