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Shapiro Realistic On CE's Prospects

11/03/2008 02:00:00 AM Eastern

While acknowledging the severe economic downturn, Gary Shapiro, president/CEO of the Consumer Electronics Association (CEA), is optimistic yet realistic about the industry's prospects for the holiday season and beyond.

During an interview with TWICE during the annual CEA Industry Forum, held at the Four Seasons Hotel, here, in October, Shapiro discussed how the industry is faring in this turbulent economy and the effects of the credit crunch on CE. He also volunteered opinions about changes in Washington, environmental policies, how International CES may be affected by the economy and several other key issues.

Part of Shapiro's optimism is based on CEA's own CE Holiday Purchase Patterns study (see TWICE, Oct. 27, p. 1 and p. 52 of this issue) which predicts that industry sales will be up 3.5 percent. But Shapiro tempered his remarks by saying that current economic conditions make it "A time of great change ... We are in the middle of an ocean that is rather turbulent."

Shapiro pointed out that during tough times, "As an industry, [CE] provides tremendous value to the consumer. We've asked consumers, despite all this, if they were going to buy products [this holiday season] and they said they will buy more than last year. We have the DTV transition, which is a hard cutoff date this coming February, [that] helps gets consumers into stores."

And compared with other industries, "Consumers may not be buying that new car or that new home, but what they are doing is staying at home, getting together with their families, being entertained and connected. So we are offering a range of solutions for the consumers."

In his remarks during the CEA Fall Forum, Shapiro said that CE "was once considered a luxury, but is now considered a necessity."

That bodes well for the industry, even in tough economic times, because "it is a necessity for every kid to have a computer and every family to have access to a television. Not every product is a necessity. But it is clear that Americans consider consumer electronics an important part of their lives," Shapiro noted.

He compared the industry's wares and value to other purchases that can be made with discretionary income. "Many products are not expensive and every product is available for a few cents per every hour of usage. When you compare consumer electronics to a vacation, a hot tub or going to the movies, or any other use of your discretionary time and money, consumer electronics is always the best value."

When asked on how the sagging economy may affect International CES attendance in January, Shapiro said, "I guess the advantage of being paranoid is that these are things we have been talking about for 10 years now."

What he meant is that CEA, producer of the show, expanded its potential pool of attendees in recent years from retailers to international attendees, the media and "as a show where related industries get together — content, cable, broadcasters, the music industry. [CES] has become a 'must attend' event for many industries."

Shapiro candidly noted that for the past couple of years, "we consciously cut down on the number of people we wanted at the show by around 10,000. We are comfortable with 130,000 to 140,000 attendees. We hit 150,000 five years ago and there were too many people."

He said that today there are more hotel rooms here but prices "are a little steep" for some, "but have been coming down. Our standard is that we don't want the price of a hotel room to be more expensive than it is on New Year's Eve."

While not tipping off much of some of the new wrinkles in this year's show prior to CEA's Nov. 11 press event in New York, Shapiro said, "Our challenge, our goal every year is to make every show different than the one prior. Make more reasons to come [to CES], and make it valuable for every attendee that comes here. It is an investment in money and in time, it is a hassle to fly ... so [we] try to make it great for the attendees. In these uncertain economic times it is more important than ever to meet with your partners face to face, to touch and feel the goods, and use a trade show for several individual business trips."

Visit www.TWICE.com to see a video of the Shapiro interview.

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