CE Retailing Is Always Precarious

By Steve Smith -- TWICE, 2/22/2010

Another month and another venerable CE retailer bids adieu. MyerEmco, which for 55 years served the Washington D.C. area as an expert A/V retailer, announced that it is going out of business, due in part to the weak economy and credit squeeze.

This follows the departure of Bernie’s, the longtime CE/ major appliance chain based in New England, which announced last month it was going out of business for similar reasons.
So is this the end of electronics/appliance retailing as we know it? I attended an industry meeting recently that was looking to honor industry leaders. One attendee quipped, “We may not have to worry about honoring retailers in a year or two because so few will be around.”

Ouch.

No, this isn’t the best of times for the economy, this industry or its retailers. And now it’s popular and easy to say that Best Buy, Walmart and Amazon will dominate CE retailing now and in the foreseeable future.

Yet CE retailing is always precarious in the best of times, and what is consistent in this industry is that new technologies inspire new business strategies for existing players, and inspire new players to enter the business, especially when times are tough.

I’ll refer you to the TWICE Retail Roundtable, which begins on p. 18. In the years that we have held this annual meeting during CES, this had to be the most candid and insightful roundtable of its type we have ever held.

Led by senior editor Alan Wolf, the 10 participants discussed connected devices and services; non-traditional technology products that probably will be sold by CE retailers now and in the future; the new frugal mindset of consumers and how retailers must adjust their business models accordingly; and, of course, new A/V and CE technologies of all stripes.

One of the more interesting exchanges came during a discussion of the changing economic and competitive landscapes in the CE industry, and how existing players — instead of wringing their hands and saying, “Woe is me” — can capitalize on this dramatic shift.

And manufacturers are certainly not oblivious to the problems retailers face. They need a healthy retail base to survive and thrive.

So the moves by Sony to expand its MAP program, the 15-city Panasonic consumer tour and $100 million ad program are in their own best interests, and the best interests of the industry’s retailers.

Another popular opinion in the CE industry has been, and probably always will be, “There’s nothing new in this business.”

Maybe it is because spring training has begun, but Dave Workman, executive director/COO of the PRO Group, addressed the popular view by saying at our roundtable, “There isn’t necessarily a home run, but there are a thousand base hits out there.”

Those retailers that will survive as the economy comes out of its stupor won’t be the ones that won’t wait for the three-run homer. They’ll put together a few “base hits” — sales and profits — by reinvesting in their operations and reviewing their product mix to build viable and profi table businesses going forward.