Better, Heathier Retailers

I had an interesting conversation recently with a veteran CE manufacturing executive. He called just to shoot the breeze and the conversation turned to how retail sales fared during the fourth quarter and January, especially when you consider that we are still in a recession.

Both of us came to the conclusion at the same time that CE retailers are a lot healthier than they used to be. "You really don't hear rumors about a handful of our retailers going to Chapter 11 or going under, given the economic climate we are in," he said.

Granted Kmart is now operating under Chapter 11 protection, but that had nothing to do with its CE effort. And there is continuing concern about one chain, but nothing to suggest that it will go under any time soon.

The health of CE retailers is, in general, pretty good. Why? Well, demand for electronics and appliances were strong during the fall and retailers readjusted their inventories. In other words, today's electronics/appliance retailers are better than the early 1980s variety. Or as Ed Kelly, director of Nationwide TV & Appliance put it during the annual TWICE Retail Roundtable held at CES last month, "Those [retailers] who are left are better businessmen. We're all after profit and we are really thinking about, God knows, make some profit, sell extended warranties and higher-ended goods."

When you read the TWICE Retail Roundtable coverage (see p. 14), top retailers are quietly optimistic and confident about the New Year. Now we are still talking about electronics/appliance retailing, a cutthroat business where, for example, a few national retailers can still kill profitability of a hot category with overly aggressive promotions.

But many have learned how to deftly manage inventories, even in the fourth quarter, so they won't get caught with too much product. They are benefiting from the overall popularity of consumer electronics, and the wave upon wave of new digital products that are reaching their shelves. And many, even during this past Holiday Season, controlled themselves and did not promote themselves into the red.

Now that's a refreshing occurrence that, with some luck, becomes an industry trend this year. At least we all hope it becomes an overwhelming trend this year.

One last word about the roundtable, which was aptly hosted by senior editor Alan Wolf, who also edited the transcript for this issue. Alan and I, and all of TWICE, would like to thank the following participants, who kindly lent their time and their insights during a typically busy CES: Ray Brown of Sears, Greg Drew of 800.com, Dave Edmondson of RadioShack, Tom Edwards of NPDTechworld, Nationwide's Ed Kelly, Mike Linton of Best Buy, Tweeter's Shelley Miller, Amazon's Frank Sadowski, Rick Souder of Circuit City, Ken Weller of Good Guys and Dave Workman of Ultimate Electronics.