Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now

×

Retailers Expect Stark Challenges During New Year

Las Vegas — Retailers expect industry consolidation as manufacturers and dealers come to terms with tough economic times.

Such was the assessment of dealers and distributors assembled for the annual TWICE Retail Roundtable, held here on the opening morning of International CES and moderated by senior editor Alan Wolf.

“Consumers decided to beat the ever-loving hell” out of retailers during the holidays, having seen aggressive discounting at department stores and expecting the same at CE, said Richard Glikes, HTSA executive director.

The holidays did not deliver pain uniformly, said Ross Rubin, industry analysis director, The NPD Group. For the five weeks starting Black Friday, total brick-and-mortar sales were down 8 percent but online sales were up 7 percent. Cyber Monday was also strong, up 44 percent from the previous year.

The top five categories for the holidays were LCD TVs, notebooks, MP3 players, digital still cameras and portable navigation devices.

The challenges facing retailers in 2009 are stark, the panel acknowledged.

Aside from the well-known housing and credit bubbles, the CE industry was also floating on a DTV transition bubble, which helped inflate flat-panel sales, dealers said. “2009 might be a watershed year where HDTV is simply seen as TV,” said Dave Workman, PRO Group executive director. Much like the end of the VCR boom, retailers are bracing for a period of “retail Darwinism” that will weed out the weak, he added.

To survive in a bleaker landscape, manufacturers and retailers will need to forge closer partnerships, dealers said. “Manufacturers need to take a step back and stop chasing market share,” said Steve Calder0, senior VP, Ken Cranes. That chase has led to brand dilution, which in turn has hurt specialty dealers who don’t have a “safe haven” of step-up products and brands, Workman said.

There is a “huge need for discipline” among both retailers and manufacturers going forward, said Rick Souder, merchandizing executive VP, Crutchfield.

For the specialty model to survive, dealers need sufficient margin support to retain qualified sales staff and installation teams, Workman said. Dealers must also get smarter about their people, training them to pull double duty in both sales and project management, said Tom Galanis, operations VP, Sixth Avenue Electronics. Trying to make custom-installation jobs more uniform will also help to control costs and squeeze profit from labor and installation, he added.

To be successful, retailers can’t shy away from low-margin product categories and loss leaders either, Galanis said. “You need to create that excitement and get the customer in the store.”

On the bright side, the ability to drive greater forms of content to consumers in seamless ways will spur consumer excitement and hardware sales. Retailers heaped praise on devices such as the Apple TV for its ability to bring a range of personal and professional content into the living room.

“I do think we’re going to see a nesting urge, and households will want to invest in their entertainment,” said Jeannette Howe, executive director of Specialty Electronics Nationwide (SEN), the 500-dealer division of the Nationwide Marketing Group.

Featured

Close