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Retail Execs Predict Bright Digital Future

1/21/2002 02:00:00 AM Eastern

Optimism reigned at the Retail Power Panel held during CES, where chief executives of some of the nation's top CE retailers lauded the long-term outlook for digital products and home networking.

The panel, moderated by CEA president/CEO Gary Shapiro, included Brad Anderson, vice chairman/COO/president, Best Buy; Alan McCollough, president/CEO, Circuit City; and Len Roberts, chairman/CEO, RadioShack.

Also on the panel, representing e-tailers, were Amazon.com founder/CEO Jeff Bezos, eBay president/CEO Meg Whitman, and Greg Drew, founder/president/CEO of CE e-tail pioneer 800.com.

The session was aptly named, as the represented retailers sold a cumulative $50 billion of CE products last year, or one third of all CE purchases, Shapiro said.

The discussion began with a review of the past holiday selling season, which all agreed was fueled by big screen TV, video games and digital products in general. "The holidays were much better than we expected," noted Anderson, who said that Best Buy enjoyed "the biggest comps" in video games and enjoyed brisk business in "anything digital."

Similarly, top Christmas categories for Circuit City were video games, DVD, big screen TVs and especially imaging, demand for which McCollough described as "extraordinary."

The notion was seconded by Drew, whose digital imaging business grew 50 percent over the holidays. He added that fully 92 percent of his projection TV business is now digital.

Roberts said that RadioShack's core batteries, parts and accessories business was a direct beneficiary of the digital product cycle during the holidays, citing RF modulators as generating "the most gross margin dollars" for the chain.

Among the Internet set, Bezos said that the early adaptors who favor his site have helped Amazon claim an 11 percent share of all MP3 sales, while the good news for eBay, according to Whitman, was that the online auction site had "finally established itself as a holiday shopping destination." Top sellers there were MP3 players, DVDs, and big screen TVs, although the merchandise is comprised of older model (40 percent), used (40 percent) and refurbished (20 percent) products.

According to the consensus, 2002 will prove to be a big year for wireless, video game software and large screen TV. Also off to a strong start is digital radio, McCollough said, while Whitman described home networking as "the fastest growing category on eBay."

McCollough also urged broadcasters to provide more HD programming in order to sustain sales of HD-ready sets. "Customers are spending money on high definition," he observed. "The question is, where's the content? We have a long way to go."

Likewise, the panelists complained that digital's growth is hampered by limited broadband availability, with Whitman even suggesting that the federal government make high speed access a national priority in order to "catch up with Korea and Japan." Agreed McCollough, "The connected home is enabled by a fat pipe coming into the home. It opens up possibilities for other devices."

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