Denon expects to post single-digit percentage dollar growth for its 99th anniversary in fiscal 2009, beginning April 1, having failed to achieve its fiscal 2008 goal of boosting sales by 10 percent, said Denon senior VP Joseph Stinziano. told TWICE.
The unexpected sharp decline in the world economy, the demise of customer Circuit City and smaller accounts, and the “extraordinary” degradation of Blu-ray player prices undermined projections, he said. “We were on track in the first five months of the fiscal year to reach 10 percent,” Stinziano told TWICE during its line preview last week. (See story on p. 4.)
The economic downturn and Circuit City demise also undermined the brand’s goal of wresting top A/V receiver (AVR) dollar share in the prior fiscal year, he said, but the brand nonetheless boosted its retail-level AVR dollar share to 21.7 percent from 20.7 percent during that time.
To achieve its 2009 sales goals, Denon will adopt a variety of strategies, including the addition of a new retailer whose name will be announced in 30 days. With the addition, Denon will not stray from its distribution strategy of selling one series of products to accounts with consultative sales environments and a second series, dubbed the retail home-theater series, to select CE retailers, he said.
Also to boost its fortunes, Denon will become the first audio company to plug into the Progressive Retailers Organization (PRO) buying group’s supply-chain management system to track inventory and sell-through, Stinziano said. Two video suppliers have already tapped into the system.
Denon will also step up its focus on delivering a premium product and experience while also delivering value. “We started a little at the end of last year [with this strategy],” he said. The brand will also leverage its strength in $1,000-plus AVRs, distribution, ease of product integration, and custom-install channel product, support and training, he added.
The economy will also help. “The bottom, if not here, is coming pretty soon,” Stinziano contended.
For the industry, Denon forecasts AVR sell-in will drop 4 percent to $375 million during the April 2009-March 2010 period, which coincides with Denon’s fiscal year. That follows an 18 percent drop for the industry in the previous fiscal year.
In speakers, including custom-install speakers, Denon forecasts a 2-3 percent decline in industry dollar sell-in in the 12 months ending March 2010. That compares with an 11 percent drop in the previous 12-month period. In the current 12-month period, custom-install speakers will turn back up, he added.
In another industry forecast, Stinziano said e-commerce sales of AVRs will outpace AVR sales through specialty channels for the first time in the April 2009-March 2010 period. “The opportunity for vendor consolidation is possible” in the 12 months ending March 2010, he added.