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Hot Products, More Doors Drive Top 100 To $96.7B

5/09/2005 02:00:00 AM Eastern


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Methodology: How We Crunched The Numbers
Product Definitions:

The nation's leading CE dealers swept aside the usual Chicken Little predictions of retail gloom and doom last year to build up fourth-quarter inventories and build out their infrastructure with new stores and distribution centers. The result of that gambit: A healthy 7.9 percent increase in total revenues for the 100 largest CE retailers, from $89.6 billion in 2003 to $96.7 billion in 2004.

Demonstrating the concentration of sales power across all CE distribution channels, the TWICE Top 100 dealers accounted for fully 78 percent of total industry retail revenues last year — estimated at $123.3 billion based on TWICE category criteria.

The tallies come courtesy of the TWICE Top 100 CE Retailers report, our annual comprehensive examination of sales performance, store counts and management lineups of consumer electronics' biggest dealers, and the channel shifts and changing trends that affect the industry overall.

This year, thanks to a new collaboration with The Stevenson Company, a nationally renowned market analysis and research group, TWICE has further refined the revenue results and has expanded the presentation with additional classes of trade and new data sets — including merchandise mix by dealer — to provide a clearer window into their operations. (See story, below.)

One such new dealer addition to the Top 100 ranks is Sony's 26-unit chain of Sony Style stores. With annual sales of $500 million and a 26th place perch on the charts — just ahead of H.H. Gregg — this vendor-operated enterprise has become a serious competitor to Sony's own trade customers and could be a harbinger of things to come.

Taken together, the data tell a story of a retail sector that bucked the double headwinds of higher fuel prices and unusually harsh weather (recall the run of hurricanes, blizzards and brush fires that variously halted store operations last year) to boost the Top 100's cumulative revenue by over $7 billion.

Much of that payoff came from re-investing in the core businesses. Capital expenditures included new storefronts and more robust e-commerce sites — along with the distribution centers and other infrastructure to support them — plus such improved back-room disciplines as inventory management and fulfillment.

But the balance of last year's CE sales lift is directly attributable to the ample ammunition supplied by vendors in the guise of sleek and newly affordable flat-panel displays and Apple's (and Hewlett-Packard's) omnipresent iPods. Once again manufacturers hit upon the product concepts that connected with consumers and fired demand, producing a CE boomlet in the back-half of the year that dealers scrambled to participate in.

As Roger Heuberger, executive director and president/CEO of the Progressive Retailers Organization (PRO Group) told TWICE at International CES, “go-go products” like iPods and satellite radios helped make electronics hip again. “There's some buzz story almost every week in national and local newspapers,” he noted. “Our industry is back in fashion.”

Indeed, the twin drivers of the core consumer electronics category, audio and video, along with an able assist from communications, accounted for fully 61 percent, or $74 billion, of the industry's estimated $123.3 billion in total CE retail sales last year. (See product definitions, below.)

Next in line, fueled by seemingly insatiable demand for digital cameras, was the computer category, including peripherals and PC accessories, which brought in $44 billion, or 35 percent of total industry retail revenues.

Mobile electronics trailed with 4 percent of total industry retail sales, or roughly $5 billion in 2004, although its share of the pie grew by 1 percentage point — ostensibly stolen from CE — as satellite radio achieved liftoff.

CE Dollar Sales By Retail Channel

STORE TYPE(a) ESTIMATED CE SALES(b) IN MILLIONS PERCENTAGE CHANGE '03-'04
REVISED 2004 REVISED 2003
Total Electronics/ Appliance Stores/Multi-Region $23,375 $20,544 13.8%
Total Mass Merchants 20,011 19,154 4.5
Total Electronics-Only Stores 18,147 16,762 8.3
Total Consumer Direct 11,522 10,218 12.8
Total Computer Store 8,575 9,337 -8.2
Total Warehouse Clubs 4,667 4,402 6.0
Total Home Office Stores 4,128 3,714 11.1
Total Miscellaneous 2,282 2,017 13.1
Total Electronics/ Appliance stores/Regional 1,626 1,500 8.4
Total Electronics/ Appliance stores/One Market 1,060 844 25.6
Total Home Furnishing 579 462 25.3
Total Drug/Grocery Store 274 255 7.5
Total Department Store 202 200 1.0
Total Home Improvement Centers 141 103 36.9
Total Catalog Showrooms 76 64 18.8
Registry Totals $96,663 $89,578 7.9%
Store types were developed jointly by TWICE and the Consumer Electronics Association.

Source: TWICE Market Research ©TWICE 2005