What If They Held A Downturn.
By Steve Smith -- TWICE, 2/12/2001
What if they held a downturn and this industry didn't participate? Take a look at the comments of top executives at the MARTA (see p. 1) and Nationwide (p. 6) buying group meetings. The gloom and doom from Wall Street, the rash of corporate layoffs, higher energy costs and calls from the new Bush administration to cut income taxes retroactive to Jan. 1 really haven't registered yet with these independent retailers or the manufacturers who do business with them.
Maybe they are just cockeyed optimists or a little slow on grasping changing economic trends, but the executives attending the MARTA and Nationwide buying group meetings during the past week or so reported the following: Holiday sales were fine; January sales were better than they expected; and 2001 will probably prove to be at least a profitable year.
That's not to say that CE and even major appliance sales will break records this year. But for retailers who are mostly privately held Main Street guys, the secret to their success is old-fashioned: They are more interested in profitability than record unit sales with ever-thinning margins.
These independent retailers who are not constrained by constantly looking over their shoulders to Wall Street and their stock prices really have an advantage over well-known national chains that are driven by the investment community to show velocity. By velocity I mean more store openings! Higher sales numbers! Reorganizations! New store designs! Etc., etc., etc.
It has been proved time and again when CE and/or appliance sales slow down that a flat holiday selling season, or a season that was up 3 percent or so vs. the previous year, is not necessarily a bad thing for independents. A flat holiday season or a flat year vs. the previous period is great, if the prior year's holiday season or calendar year was a record one. That's what happened to many of them during Christmas, and that is what some of them are thinking may happen this year.
Actually, some think sales will be up a few percent this year, based on continuing demand for HD-ready TVs, continuing growth in DVD players (especially progressive DVD) and the wealth of digital products such as MP3 players, digital cameras and others reaching the marketplace. Many of these dealers have absorbed the shock of the major appliance distribution changes of the past year. They have re-merchandised their stores so they are not selling the same model numbers Home Depot, Lowe's and Wal-Mart are now carrying. And they have benefited from Circuit City's departure from major appliances.
Many of the retailers TWICE spoke to at both buying group meetings said January sales rebounded from any doldrums they had in December. It is very early yet to say with any certainty that the January trend will continue and things will be fine this year. I'm not saying that the CE and major appliance businesses are recession-proof, but it is a hopeful sign that these Main Street merchants are not panicking. At least not yet.
