Sony's Glasgow Sees 2nd-Half Sales Growth

PLAYA DEL CARMEN, MEXICO — Sony Electronics president Stan Glasgow is positive about CE sales for the rest of 2008 and a variety of Sony-related retail initiatives.

In an exclusive interview with TWICE during the Consumer Electronics Association's CEO Summit, held here last month (see p. 22-23), Glasgow discussed retail, the ongoing DTV transition, Sony's SURE pricing program and Bravia distribution, as well as technology developments.

Retail sales and how they are going is always on the top of the list of industry concerns, especially during an economic downturn.

Glasgow had a positive view of the situation. "We have seen a continuing demand for CE products. I think [CE] is one of the key product categories [in the economy] that is doing rather well all through the start of this year. And we do expect that to continue. I think the transition in February of next year is a very critical factor in moving people to HD and getting people to buy more high-definition TVs and products."

When asked about how DTV transition consumer education is going, Glasgow said that it is "intensifying now." He added, "I think it is a matter of all the consumer electronics companies and the retailers doing as much as they can to educate the public [to enable consumers to] make the right decisions."

As for Sony, Glasgow mentioned its HDNA campaign which started last year and explains "the range of HD products and what Sony can offer them. We've also done that at retail try at retail floors across this country. It allows [consumers] to understand what changes are taking place and what products are available. "

Speaking of retail, this spring Sony announced a new sales and pricing policy for selected high-end products called the Sony Unified Resale Execution (SURE). While the program is just beginning now, Glasgow said the initial reaction from retailers has been "very positive. [It is a] win for them, a win for us and a win for the consumer."

He explained that at the high end "pricing is not the most critical issue ... it is the features and how the retailer services the consumer." Glasgow said, "SURE should stabilize pricing across the retail channel and let retailers differentiate themselves by the levels of service. It stops all the bad discounting." There are no plans at this point to expand the program, he noted.

The Bravia LCD line of HDTVs has been a major success story for Sony the past couple of years. Some retailers are concerned that Sony has expanded Bravia distribution to mass merchants such as Wal-Mart. Glasgow explained that Bravia is now a wide, "very differentiated" line, with "most of our specialists selling the high end." He pointed out that those Bravia models that are sold by Wal-Mart and other mass merchants are designed and "targeted for Wal-Mart [customers]. We will sell product where consumers shop. We can't make that determination."

Glasgow stressed, "We have designed a [wider] range of LCD products than we ever have ... [providing] many different levels of product, so it gives the specialists the opportunity to sell what they are good at — high end, extra feature based units. It gives [mass merchants] the opportunity to sell what they are good at — base product — where consumers are looking for entry price points."

Addressing Sony's online retail presence and its Sony Style stores, Glasgow provided an update of expansion plans and explained how the stores impact the company's retail partners in the same markets.

"We are expanding very slowly, with only six new stores this year ... in very high-end markets. We are planning eventually to go up to 60 stores. That is our stated goal," he noted.

The expansion of Sony Style stores has become "more of a partnership" with their retailers because when a new Sony location opens, "all our retail partners in that area sell more. We are spending a lot of time and money educating the consumer about Sony products, which is our obligation, but [consumers] end up buying [Sony products] from our retail partners."

Glasgow said nine out of 10 Sony purchases at retail stores in markets where Sony has an outlet have visited a Sony Style store.

Glasgow also commented on two retail chains that have been under the industry microscope for more than a year: Tweeter and Circuit City.

"I think those that provide a level of service that consumers think are fair will survive. Some have expanded too quickly, some have grown too fast. Tweeter is going back to the concept where they have their strength, with service," he explained.

"If [Tweeter] does it right and manages it right, I think they will be very successful. I think we need specialists that can help consumers and explain the products and Tweeter is one of those."

As for Circuit City, Glasgow was also supportive, saying, "I think it is critical that this industry have a strong No. 2 in electronics. And the health of Circuit City is important to Sony and most manufacturers.

"We want Circuit City to be a strong company. They have some challenges in terms of old stores, in terms of remaking stores. "

On the chain's new The City stores, Glasgow commented, "We think they are excellent. [The City] is a good approach for the consumers. I've been to the stores and I think there is an opportunity there. Again, you have to provide the right amount of service to the customer. If the stores are set up properly and the right level of service is there, and the cost structure is in line, they should be a highly competitive No. 2."

Visit www.TWICE.com to see a video of the Glasgow interview.