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Top 100 Top $100 Billion In CE Sales

11/24/2003 02:00:00 AM Eastern


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Despite an anemic economy and apprehension over possible terrorism and an impending war, the nation's largest CE dealers managed to boost sales 6.2 percent last year, according to the latest TWICE Top 100 CE Retailers ranking.

In the process, these top merchants successfully busted through the $100 billion mark for the first time by taking in $101.4 billion in electronics-related revenue, compared to the revised $95.5 billion garnered in 2001.

The sales gains were especially propitious given the universally wretched fourth quarter holiday selling season, a period that sent many retailers' sales results into negative territory.

Nevertheless, despite an aggressive promotional environment that began rearing its head last summer — and put more big-ticket items like flat-panel displays and HD-capable TVs within reach of mainstream shoppers — the TWICE 100 failed to top their own growth performance of 2001. That year, in which consumers were shell-shocked by the Sept. 11 terrorist attacks and buffeted by wild swings on Wall Street, CE sales still climbed nearly 7 percent.

Putting last year's 6 percent gains into a broader context, let us recall that the group's CE revenue grew 13.4 percent in 2000, and 16.7 percent in 1995.

The tougher, more competitive marketplace faced by retailers last year was reflected in significant shifts atop the Top 100 rankings, as cost-conscious consumers gravitated in ever-larger numbers to discount leviathans Wal-Mart and Target.

Thanks to an ambitious strategy of upping the pace of new store construction in the face of a soft retail scene — plus a concerted effort to expand and refine its CE assortment — Wal-Mart has unseated Circuit City as the nation's No. 2 seller of consumer electronics.

The world's largest retailer — and corporation — grew its CE business by just under 13 percent last year to $14.1 billion, while Circuit City — still trying to hit its stride amid store revamps and new merchandising and marketing initiatives — didn't keep pace. Indeed, sales for the new No. 3 CE merchant rose a modest 4.6 percent last year to $9.9 billion, trailing the Top 100 average.

Also feeling the heat is still-reigning champ Best Buy, which has publicly cited Wal-Mart as its biggest competitive threat. The company managed to expand its lead over The House That Sam Built by ramping up sales 14.4 percent at its flagship stores to $16.7 billion last year. But it is also adapting new defensive measures such as aiming its assortment higher (witness new brand additions Mitsubishi and Klipsch) and direct sourcing from Asia, a la Wal-Mart.

The same scenario played itself out several notches lower on the listings, as Target leapfrogged RadioShack to claim fifth place. The mass merchant from Minneapolis carried its successful formula of low prices, proprietary designer brands and a cool, fashion-forward cache into the CE department. There consumers found the lime-green Liv line for gals, Sony's first and only private-label program; Virgin Mobile's customized Target displays; and a number of CE wares emblazoned with the retailer's signature red and white bull's-eye.

The strategy helped Target grow its CE business faster than Wal-Mart, with sales soaring 13.3 percent to $4.8 billion. By contrast, revenue at RadioShack actually fell 4.1 percent, to $4.6 billion, as the chain worked through changes in its merchandise mix, reconfigured stores and struggled through softness in the cellular phone market.

But both Target and RadioShack had to make way for a new addition to the TWICE Top 100: Dell. By opening its assortment up to non-computer (and non-Dell) products such as MP3 players and digital cameras, the industry's premier PC maker and merchant now qualifies for inclusion in the TWICE Top 100 in addition to its regular berth on the TWICE PC rankings.

To mark its debut, Dell soared into fourth place behind Circuit City, buoyed by some $5.3 billion in consumer product sales, representing a mighty 18.8 percent leap in volume over 2001.Rounding out the Top 10 are CompUSA, Staples and Sears, whose positions remained static at seven, eight and nine, respectively.

Less static was Sears' precipitous 15.4 percent sales decline, to $2.8 billion, which echoed market share erosion in its core major appliance business and consecutive monthly comp-sale drops company-wide through 2002.

According to Sears CEO Alan Lacy, the setbacks were attributable in part to traffic disruption caused by store renovations, as departments were reconfigured, aisles widened and checkout centralized. Also compounding Sears' problems — as Best Buy also learned with 46th ranked Musicland — is the decline of the shopping mall as consumers' venue of choice.

By contrast, CompUSA and Staples managed near-average gains of 5.1 percent and 6.4 percent, respectively.

Based on the same rationale applied to Dell, TWICE also opened the Top 100 books to Gateway and Apple. As a result, Gateway broke into the Top 20 with $2.1 billion in sales, landing in 13th place amid a 30 percent drop in revenue that precipitated this year's store closings, job cuts and back-end overhauls.

For Apple, a 471.6 percent sales surge born of a near doubling in store count (to 51 units) delivered the Macmeisters to 34th place on the TWICE rankings with $383 million in volume under their belt.

Elsewhere on the listings, Kmart's woes were reflected in a 15-percent drop in CE sales to $2.2 billion, as the bankrupt retailer slashed store counts and de-emphasized electronics in favor of soft goods as it struggled to return to solvency. Despite the downturn, the No. 3 discounter retained its 12th-place berth.

A less fortunate fate befell Ames, the East Coast discount chain that had survived fellow regional mass merchants Bradlee's, Caldor and Jamesway, only to succumb last year to onslaughts by Wal-Mart and Target. Its final ranking: 65, amid a 53 percent decline in CE sales to $100 million.

Also taking a fall was Fingerhut , which saw its CE sales plunge 80 percent to $66 million as former corporate parent and department store group Federated sold off the direct-sale business. Acquired during the Internet boom to establish an e-commerce presence for the Macy's and Bloomingdale's nameplates, Fingerhut's final ranking as a department store subsidiary was 76, down from 35 the previous year.

By contrast, Blockbuster made good on its promise to bring CE to most of its stores last year. Now offering gaming hardware and software, DVD players and VCRs, and cables and connectors in addition to its leading DirecTV business, the chain saw its CE sales soar 60 percent to $77 million, moving it from 90th place to 74th.

CE Sales By Retail Channel in $ millions

Store Type (a) Estimated CE Sales (b) in millions Revised 2002 Estimated CE Sales (b) in millions Revised 2001 Percentage Change '01-02
Total Electronics/ Appliance stores/Multi-region $28,683 $26,094 9.9%
Total Mass Merchants 25,269 24,086 4.9
Total Computer Store 9,741 9,914 -1.7
Total Electronics-only stores 8,693 8,528 1.9
Total Consumer Direct 8,560 7,838 9.2
Total Home Office Stores 8,113 7,850 3.4
Total Warehouse Clubs 4,625 4,175 10.8
Total Miscellaneous 3,664 3,396 7.9
Total Electronics/ Appliance stores/One Market 1,620 1,529 6.0
Total Electronics/Appliance stores/Regional 932 847 10.0
Total Drug/Grocery Store 538 403 33.5
Total Home Furnishing 475 428 11.0
Total Department Store 281 272 3.3
Total Home Improvement Centers 121 106 14.2
Total Catalog Showrooms 105 80 31.3
Registry Totals $101,381 $95,487 6.2%
(a) Store type codes were developed jointly by TWICE and the Consumer Electronics Association.

(b) All sales information, except for that supplied by publicly held companies that break out line-of-business sales for consumer electronics, is based on TWICE Market Research estimates.

Source: TWICE Market Research, © TWICE 2003


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