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Retail Reflections, Projections

4/30/2001 02:00:00 AM Eastern

When you experience what this economy has gone through since around last November - the start of the retail sales slowdown in the United States - a report like the TWICE CE Retail Registry seems like ancient history, especially because we always review the previous calendar year, in this case, 2000.

According to some, we crossed into the new millennium last year, but economically it looks like 2000 was the last year of the 1990s' economic boom, which lasted most of the decade. By the middle of last year, and definitely towards the end, the economy began to wobble, if not stagger. Holiday sales were comparatively sluggish, Wall Street's love affair with profitless dot-coms cooled, energy costs rose and corporate layoffs began. In CE retailing Montgomery Ward, Roberds, Heilig Meyers and Bradlees bit the dust.

However, when you look closely at our report, some surprising positive trends emerge. First off, the top 100 consumer electronics retailers' sales increased as a group by 13.4 percent, a double-digit increase. That's not bad when you consider that for many retailers the holiday season was quieter than expected.

While discount chains, drugstores, warehouse clubs and the like used commodity (read analog ) products to spur sales with scant margins, those chains that emphasized digital products grew dramatically. Best Buy, Circuit City, RadioShack and, most dramatically, Sears increased sales in the double-digit range.

Based on Sears' dramatic increase in sales during 2000, a 62.4 percent jump to $6.01 billion in CE sales, the chain now ranks as the third-largest retailer in the industry. Ray Brown, Sears' VP/general manager of electronics and home office, said digital products such as HDTV, digital cameras, camcorders and DVD drove the chain's CE growth. (P.S. – Digital product sales probably didn't hurt Sears' bottom line either.)

Another surprise is that e-commerce didn't disappear with all the dot-coms that closed during the last half year. Amazon.com reported $600 million in CE sales last year, making it the second-largest company in the category. Two other e-commerce companies, 800.com and Roxy Satellite & Wireless, also reported strong sales increases in CE, while others such as Egghead and Outpost took it on the chin. But the real surprise in CE e-tailing is that brick & mortar retailers are making online sales an everyday part of their business … just like many predicted.

What will happen at retail for the balance of the year is still up for grabs. Many say that the second half will be a lot better than the first (How could it be much worse?), and if that's the case, industry sales should be at least flat or up a few percentage points versus 2000. That's not what the industry has been accustomed to during the last few years, but sometimes you have to take what you can get.

One last word. We would be remiss not to thank those how helped put together this year's report: Susan Connolly, associate research director for our parent company Cahners Business Information; Paul Zorfass and his team at First Technology Inc. of Weston, MA.; senior editor Alan Wolf; managing editor John Laposky; associate editors Tedra Meyer and Will Safer; and designer Desiree Nunez.