A Jekyll & Hyde Kinda Year

I took a look back at yours truly's year-end column for 2001 and the headline blared, "Good Riddance," for obvious reasons. Maybe this year's should be titled "Good Grief!" for all the odd and unexpected things that have happened in the electronics/appliance business during 2002. Actually when you take a look at our annual retail retrospective (see p. 20) the year seems to have a Jekyll and Hyde quality to it.

During January the electronics and appliance industries breathed a collective sigh of relief that sales of their products were immune to the dank holiday sales season of 2001. The refinancing boom was still in full swing and demand for digital CE products and upscale major appliances of all shapes and sizes were doing fine… that is until summertime.

By then, with the Wall Street scandals in full swing, consumers were gulping hard as their 401k and other investments in the stock market evaporated like an Italian ice melting in the broiling July sun. Major corporate layoffs began to kick in. Consumer confidence sank, and with it earnings at publicly held electronics/appliance companies dipped.

The weird thing was that in speaking to independent retailers, and the buying groups they belong to, the overwhelming majority said that sales during the summer and fall continued to be fine. Some of the sales growth slowed down vs. the first half, but it was growth nonetheless. Many conjectured how the small guys were doing fine while the majors were singing the blues. Some said that larger chains were too aggressive in their purchases and had to work off excess inventory. There were plenty of other theories, too numerous to mention.

By the fall those retailers that had a little extra electronics inventory were thankful. A 10-day closing of the West Coast docks, and a subsequent slowdown while dock workers and management were negotiating, created some spot shortages and plenty of anxiety. Luckily it was more of a bump in the road than a major disruption, because when both sides inked a new contract last month there were few complaints about product shortages.

As Thanksgiving and Black Friday approached gloom and doom was the conventional wisdom for most retailing pundits. Not only was the economy in a malaise, mixed with war talk about Iraq, the calendar was against merchants. (There are fewer shopping days between Thanksgiving and Christmas than last year.) Many wondered whether retailers would have a holiday season.

Well, Wal-Mart celebrated the biggest day of Black Friday sales in its history, led by $39 DVD decks. While sales and price cutting are the order of the day (So what else is new?), a Thanksgiving week NPD TechWorld report (see p. 1) showed that products such as digital cameras, MP3 players, DVD decks, LCD monitors and home networking had double- or triple-digit sales gains.

Will this positive trend continue through the end of the holiday season? I'm not a betting man, but for all concerned I hope so. We'll give you the industry's initial take on holiday sales in our first issue of the New Year, January 9, 2003, opening day of International CES in Las Vegas.

Until then, from all of us at TWICE, have a happy holiday season and a healthy New Year.

This is the final issue of TWICE for 2002. Between now and our January 9, 2003, issue when we preview International CES check www.TWICE.com for news updates.