NEW YORK –
For a year that saw TV pricing stumble, Sears and Best
Buy fumble, and top 40 A/V chain Sixth Avenue Electronics crumble, CE
sell-through was surprisingly solid in 2011.
Cumulative sales for the industry’s 100 largest retailers
rose 5.2 percent last year to $133.2 billion, off
slightly from 2010’s 5.8 percent increase.
But as TWICE’s annual Top 100 CE Retailers Report
shows, the gains were concentrated among a handful
of fast-track companies, offsetting widespread declines
among ranking dealers and masking a more fundamental
weakness within the CE retail
channel.
The data, compiled by market
research partner The Stevenson
Company of Louisville, Ky., also
captured the seismic shifts that
are reshaping the industry, as
consumers adopt new shopping
behaviors, and old go-to-market
models are being upended by the
very technology retailers sell.
Perhaps the biggest beneficiary
of the new world order is Amazon.
com. CEO Jeff Bezos invested billions
in infrastructure over nearly
two decades, leaving his brainchild
perfectly poised to catch the
e-commerce wave as consumers took to their computers
and smartphones during the recession to compare
prices and save gas. Tens of millions are drawn by Amazon’s
often break-even prices, its popular Kindle portable
devices, a growing pool of content and third-party
sellers, and the web’s lax tax status.
To add insult to injury, the company even offered a 5
percent discount to users of its mobile shopping app
last holiday season to further encourage showrooming.
The net effect: Amazon’s CE sales skyrocketed 52 percent
last year, and the e-tailer leapfrogged Apple to become
the No. 3 CE source behind Walmart and Best Buy.
But don’t cry for me, Cupertino. That sucking sound
you hear is the diversion of billions of dollars of disposable CE income to Apple’s brilliant handheld products
and ecosystem, which has effectively body-checked
much of the consumer electronics industry. Those who
have been granted access have paid the price in lower
margins and profitability (see RadioShack and Verizon),
while the migration to mobile that was fomented by
iPhone and iPad has further undermined TV sales, long
the cornerstone of this business.
Together Apple and Amazon accounted for $23.2 billion
in CE retail sales in 2011, or 17 percent of the Top
100 universe, up from 13 percent the prior year.
But the double A’s weren’t CE’s only success stories
in 2011. On a smaller scale, Anaheim, Calif.-based
Paul’s TV posted an 86 percent
sales spike year over year – the
most of any ranking retailer – with
a novel brick-and-mortar strategy
that placed it firmly within the
top 50. Partnering with regional
furniture chains around the country,
the 48-year-old business has
leased scores of in-store hometheater
shops to leverage the
traffic of the burgeoning home
furnishings category.
Also showing hefty gains was
six-year-old Simply Mac (No. 89),
a Top 100 newcomer that grew
its top line by 67 percent by riding
the MacBook wave and adding
three stores. InMotion Entertainment (No. 76), the
airport CE chain, similarly accelerated sales, by 27
percent, by opening eight new locations as airline travel
rebounded.
Still, stiff online competition, TV commoditization,
and in some instances store closures left the majority
of Top 100 dealers showing single- to double-digit
sales declines last year. None was steeper than Sixth
Avenue’s, which fell 67 percent as the company shut
its three remaining locations. Once the reigning New
York-area A/V champ with 19 stores in four states, it
was felled by over-expanding – rather than transforming
– amid the market forces that are rapidly restructuring
the retail landscape.
Methodology
The TWICE Top 100 CE Retailers Report ranks
the leading domestic CE dealers by sales of
consumer electronics.
Sales figures are based on information that was
supplied by retailers responding to a 300-dealer survey
by TWICE and its research partner The Stevenson
Company. Absent retailers’ input, estimates were
developed from Stevenson’s internal market tracking
surveys (TraQline), industry sizing based on wholesale
shipment figures from the Consumer Electronics
Association (CEA) and other sources, and average
retail price points by product.
All estimates were further refined through the use
of public filings with the Securities and Exchange
Commission (SEC), TWICE industry analyses, retail
analysts’ financial reports, published data and other
external sources.
Once the estimate was determined to be a reasonable
assumption of the retailer’s CE sales, the figure
was broken out by product category based on the
TraQline surveys.
Sales figures by total and by category for 2011
were then compared to 2010 sales tallies, and adjusted
if necessary to more closely track total reported
revenue growth.
Businesses must meet the following criteria to be
considered consumer electronics retailers and to
qualify for inclusion in the Top 100 report:
• sells new products directly to consumers;
• has physical retail store locations, or has a significant
online presence;
• sells consumer electronic products as one of its
principal lines of business;
• does not offer consumer electronics products primarily
to sell its transmission services, i.e. wireless
carriers, cable operators, satellite radio/TV providers;
and
• sells merchandise that is considered consumer
electronics products as defined by the CEA (see
product definitions at right).
Sales are considered to be the revenue received
for the products sold primarily to consumers, including
CE hardware and accessories; personal computers,
peripherals and software; and video game
platforms and software.
Sales of prerecorded music CDs and movie DVDs
and Blu-ray discs are excluded from the report.
Respondents were also instructed to exclude revenues
received for installation services, repair services,
rentals, extended-service contracts and vendor
marketing support, as well as sales to the business,
government and education channels.
Based on The Stevenson Company’s proprietary
methodology, a refined baseline was developed for
this annual project effective with the 2005 Top 100
CE Retailers Report, our first collaboration, covering
the years 2003 and 2004. Therefore, comparisons
with Top 100 reports issued prior to 2005 would be
imprecise.
The Stevenson Company, based in Louisville, Ky.,
began as the global economic analysis and research
department of GE Appliances. Now independent, the
market research firm has served the consumer electronics
and major appliances industries for the past
16 years by developing markets sizing and market
share estimates.
Its TraQline syndicated quarterly survey of 150,000
shoppers measures retail purchases of consumer durables
and provides estimates of unit and dollar market
share and other key measures.
What Is a CE Product?
As defined by the Consumer Electronics Association,
here is a breakdown of what constitutes
a consumer electronics product and
what was included in the Top 100’s sales totals:
CONSUMER ELECTRONICS
Accessories:
batteries, cables, miscellaneous
accessories
Audio products:
home speakers, receivers, CD
players , (home and portable), home theater in a
box, pocket and portable radios, boomboxes, MP3
players, docking stations, distributed audio products,
mini stereos, clock radios, headphones, blank
recordable audio media
Communications products:
corded and cordless
phones, answering machines, fax machines,
pagers, cellphones and smartphones, PDAs, CB
radios
Video products:
VCRs, Blu-ray and DVD players,
DVD recorders, hard-disk recorders, satellite
TV dishes and systems, camcorders, TVs and TV/
VCRs/DVD/Blu-ray combos, blank recordable video
media, video game players, video games
INFORMATION TECHNOLOGY:
Desktop/notebook/
netbook/tablet PCs, e-readers, monitors, external
drives, networking products, optical drives, printers,
software, accessory hardware (cards, hard drives,
keyboards, mice, etc.), digital cameras, flash media
CAR ELECTRONICS:
Car speakers, car radios,
car CD players, car amps, satellite radios, radar
detectors, burglar alarms, GPS, mobile TVs, video
monitors, car media players, car receivers
