The year began with a whimper as dealers and vendors tried to find their footing following a dismal holiday season.

Retrenchment would soon become the theme for 2009, with the wet blanket of recession tamping down business and forcing companies of all sizes to reexamine operations.

But despite high joblessness and weak sales, retailers found lifelines in new categories and services like solar power and fitness; in sales of digital converter boxes and HDTVs as television broadcasts went digital; in netbooks and app-driven wireless devices; and in the shutting of Circuit City, whose death allowed others to live on.

The final chapter of 2009 and the first digital decade are still being written as we go to press. Here's hoping they end with, if not a bang, at least the promise of better days ahead. - Alan Wolf
JANUARY

Circuit City's Swan Song

Going-out-of-business sales began at Circuit City's 567 remaining stores this month after last-minute negotiations with two potential buyers fell through.

A bankruptcy court's approval of the liquidation spelled the end of the 50-year-old CE specialty chain, which was founded in 1949 by Sam Wurtzel as Wards and filed for Chapter 11 in late 2008.

The $1.8 billion closeout sale was the largest in CE history, but it would prove only marginally disruptive to remaining retailers. Indeed, the $7 billion in sales that Circuit City relinquished provided them a once-in-a-lifetime opportunity to acquire new customers, increase market share and open new locations within Circuit's newly vacant storefronts.
CE Reeling From Recession

The downturn in consumer spending following the near meltdown of the financial markets took a big toll on CE retailers and manufacturers. Holiday sales were down for Best Buy and most of the nation's leading full-line chains, while vendors including Sony, Microsoft, LG, Bose and Samsung announced losses, layoffs and wholesale reorganizations.

Against that backdrop, Consumer Electronics Association (CEA) president and CEO Gary Shapiro urged attendees at International CES to "keep perspective" on the economic freefall. "Each day may seem bleaker than the day before," he said. "We are gripped by the worst economy since the Great Depression. We are worried about our economy, our jobs and our future. [But] we must remember that we are a free market economy, and in a free market at times we will expand and at times we will contract."
FEBRUARY

Industry Mixed On DTV Extension

Obama administration-led legislation that pushed back the transition to all-digital TV broadcasting from Feb. 17 to June 12 received mixed support from the CE industry. Some retailers feared that extending the changeover would create consumer confusion following year-long public service campaigns targeting the original date, while others welcomed the delay as an opportunity to sell additional DTV converter boxes and HDTVs.

CEA's Gary Shapiro pledged the trade group's full support for a successful transition but warned that the date change "will inject uncertainty into the market and may result in a shortage of converter boxes" because inventory was based on the February transition date.
Buying Groups See Sales Stabilizing

While CE retail was hardly out of the woods, dealers began to find their footing again as traffic patterns improved and consumers regained the confidence to spend, buying group executives reported.

"Business is not good, but there are signs of hope," observed Richard Glikes, executive director of Home Theater Specialists of America (HTSA). "Traffic is up and prospects for future install jobs are picking up a little bit," and trends should continue to improve as consumer confidence returns, he said.

"It's a struggle," added Home Entertainment Source executive VP Jim Ristow, "but all things considered, we're actually doing well."
Dealers Mourn Pioneer TV's Passing

CE specialty merchants expressed regret over Pioneer's decision to pull the plug on its ultra-premium plasma TV line, which fell victim to high production costs and a more value-conscious consumer.

"To end a premier brand is unfortunate," said Dave Workman, president/COO of the Progressive Retailers Organization (PRO Group). "For our group the brand has been extremely important. It's tough that niche players can't continue to compete in this business."
MARCH

Ritz Files Chapter 11

The country's largest specialty imaging chain, Ritz Camera Centers, filed for Chapter 11 bankruptcy protection just days before the start of the PMA trade show. The recession's latest retail victim cited a downturn in its camera and boating businesses, and also pointed to a reduction in photo-finishing revenues. The decision to file Chapter 11 came after nervous lenders ordered Ritz to boost its reserves. The company, headed by CEO David Ritz, operates the Ritz Camera, Wolf Camera, Kits Cameras, Ink-leys Camera shops and Boater's World chains.

Ritz would later buy back the company at auction in a move that allowed him to shed debt and keep open most of the flagship chain's remaining 375 stores.
RadioShack Outlines
New Strategy

RadioShack would "burnish" its brand, add more private-label programs, and continue to build its wireless business under a new go-to-market strategy that was shared with investors during a rare earnings call by chairman/CEO Julian Day.

Despite weak fourth-quarter results, the chain made significant operational improvements in 2008, would expand its private label assortment with three new in-house A/V brands, and would introduce a new ad campaign in July that leveraged RadioShack's heritage while "clarifying its positioning" in the marketplace, Day said.
Retail Chess Pieces Changing

As Circuit City shut its last remaining stores and entered its final phase of liquidation, dealers began exploiting the new CE retail landscape by overhauling operations and expanding into new markets.

The former included Sears, whose newly installed CE president Karen Austin began building her new merchandising team, and hhgregg, which announced plans to promote president Dennis May to CEO in the summer in advance of a major expansion.

Meanwhile, regional chains began their own multistate build-outs, including New Jersey-based Sixth Avenue Electronics, which would open at least four stores in the Philadelphia market; P.C. Richard & Son, which would expand into Connecticut and Central New Jersey; and Florida's Appliance Direct, which announced plans to assume 39 leases from Rex Stores as that company exited the retail business.
APRIL

Best Buy Revamps Store Operations

Best Buy restructured its store operations in an effort to cut costs and put more supervisory personnel on the sales floor. The reorganization, which resulted in a headcount reduction and pay cuts, was the next step in a companywide restructuring that began with the voluntary separation of 500 corporate workers in February and the loss of 250 headquarters jobs in March.
Dealers Adapting To New Business Climate

Like Best Buy, independent dealers also retooled their businesses by lowering costs and adding new services and product categories in order to navigate the choppy economic waters. Attendees at this month's two major buying group shows by Nationwide and Brand Source said sales had improved markedly since December, although sales and traffic remained halting.

Meanwhile, national and regional CE chains reported that the inventory constraints and Circuit City liquidation events that impacted sales in January and February have since eased, clearing the way for revenue and market share gains.
Systemax Bids For
Circuit City Brand

Systemax structured a deal to buy Circuit City's trademark and Internet assets for $6.5 million. The sale, expected to close following a mid-May auction, would give the Long Island, N.Y. based IT manufacturer and direct marketer Circuit's domain names, Web site content, customer data, and certain online patents and applications in exchange for the purchase price and a percentage of sales for 30 months.

Systemax similarly acquired the brand and e-commerce business of CompUSA in 2008, along with more than a dozen storefronts. The company also operates TigerDirect, a catalog, Web site and small chain of IT retail stores that carry its house-brand computers and parts.
MAY

Retail Sales Blunted In '08

TWICE released its annual Top 100 CE Retailers Report, and the results were mixed. Sell-through for the industry's 100 largest dealers edged up 3 percent last year to $126.2 billion, compared with a 10 percent gain over the prior year.

Still, given the economic upheavals of the fall, the liquidation and bankruptcies of Tweeter and Circuit City, and the maturing life cycles of former growth categories like MP3, DVD and digital imaging, the low-single-digit increase underscored the tenacity of CE retailers and consumers' love affair with electronics.
HTSA Mounts Market Share Offensive

HTSA initiated a three-pronged plan to give its member dealers, installers and system integrators a higher profile in the marketplace and take competitors' share.

The strategy, unveiled during the buying group's spring meeting, leveraged the Internet, direct mail and a third, unannounced component that was still in the planning stage. "It's all about share right now," said executive director Richard Glikes. "The market is shrinking, so to succeed you have to eat somebody's lunch."
JUNE

Vendors See Sales Improvement At Retail

Major TV and CE manufacturers perceived improvement at retail and opportunities for well-focused suppliers and dealers during a time of economic downturn and consolidation in the industry.

According to executives from JVC, Mitsubishi, Samsung, Sharp and Toshiba who attended PRO Group's annual spring meeting, line transitions and high unemployment were still slowing growth rates, although TV continued to demonstrate its resilience and dealers picked up additional dollars from former Circuit City customers.
Top PC Dealers Post
2.4% Increase

The 25 largest PC dealers generated $44.8 billion in category sales last year, up a modest 2.4 percent from 2007, according to the Top 25 PC Retailers report, released this month by TWICE. Revenue was restrained by a 10 percent drop in fourth-quarter shipments and a 19 percent plunge in sales for No. 2 PC dealer Dell. In contrast, sales soared 68 percent at Apple stores, which rose to fourth place in the rankings with $3.8 billion in computer sales.
hhgregg Plans National Expansion

hhgregg said it would move aggressively into new markets next year, setting the stage for an eventual nationwide expansion.

In a series of investor presentations, chairman Jerry Throgmartin and CEO-elect Dennis May said the time is ripe for a second national CE and appliance chain, albeit one that sells a more profitable mix of premium products through a well-trained sales force that can properly explain them.

"Manufacturers are struggling significantly with profitability, and they are extremely excited about us becoming a national retailer like the Circuit City of 10 or 15 years ago," Throgmartin said.
Brad Anderson Steps Down

Brad Anderson handed over the managerial reins of Best Buy to his successor, Brian Dunn, after seven years as the company's second CEO. During his tenure as chief executive, the company embraced the innovative customer centricity concept, annual revenue more than doubled to $40 billion, and store count increased from some 600 to nearly 3,900 in 13 countries.

As Anderson embarked on retirement, founder/chairman Dick Schulze thanked the one-time stereo salesman for his 30 years of service and read a corporate proclamation recognizing him for his contribution. "Brad truly bleeds blue blood," Schulze said, "and he epitomizes all that is good in leadership."
Top Car Electronics Dealers Up 2.7%

The biggest dealers in car electronics saw a modest 2.7 percent gain in category sales during 2008, to $5.5 billion, according to TWICE's annual Top 25 Car Electronics Retailers report released this month. But as portable GPS sales flattened, many of the big-box retailers may play a lesser role in car electronics as regional players and local specialty dealers step up to the plate.

Forty percent of ranking retailers showed declines last year, including a 5 percent dip for market leader Best Buy. By contrast, online-only dealer Newegg.com racked up triple-digit gains in 2008, which helped it crack the Top 25 with $40 million in car electronics sell-through.
JULY

Retailers Launch Programs To Grow Share

Dealers large and small rolled out new initiatives to take market share. Among the former, Best Buy is planning to alter the layout of its stores in order to emphasize services and make room for new categories like musical instruments and fitness, and will open 40 freestanding mobile stores during its current fiscal year.

Among the latter, New Jersey-based Sixth Avenue Electronics laid the groundwork for a major expansion into Pennsylvania and Delaware with the installation of a comprehensive management software system from SAP that would streamline and standardize virtually every element of its operations when it went live in August.
Dealers Prepare For Tough Q4

Tight inventory, high unemployment and fierce Black Friday promotions would make the fourth quarter especially challenging for CE retail, dealers and distributors told TWICE, as they girded themselves for holiday battle.

"Dealers have two choices," said MyerEmco CEO Jon Myer, who had recently assumed the additional role of president from company veteran Gary Yacoubian. "Fight or die."

Industry executives estimated that more than 10 percent of independent dealers would follow the latter course as a result of the recession, including latest casualty Anderson's TV. "I was trying to find a way to be profitable ... but we had a very large cash bleed," said Dave Malloy, principal of the 32-year-old specialty chain.
AUGUST

Nationwide Ready For 2nd Half

Nationwide Marketing Group said it was well positioned in CE to take advantage of ongoing supplier relationships and strategies this fall, and was optimistic about achieving industry-leading performance despite the challenging economy.

The buying group could "certainly see double-digit growth [in CE]" as more appliance dealers add electronics to the mix amid the white-goods downturn, said marketing senior VP Mike Decker during Nationwide's annual summer meeting. "We are looking forward to the fourth quarter due to the deals that we have in place."
Big-Box Chains Post Weak Results

Seasonal sales and earnings were weak for public big-box chains. Among those reporting this month, hhgregg said comp store sales fell 14.7 percent for the three months ending June 30; comps were down 5.2 percent at Conn's for the three months ending July 31; August comps for CE and majap were down by mid-single digits at Costco; and Systemax said quarterly comps were up more than 15 percent for its CompUSA, CircuitCity.com and TigerDirect businesses.

Elsewhere in retail, quarterly earnings were flat at Wal-Mart and down 19 percent at Lowe's, while Sears Holdings reported a $94 million loss for the quarter ending Aug. 1.
SEPTEMBER

NATM Dealers Adapting To Low-Margin Marketplace

NATM, the 11-member buying group comprised of some of the industry's largest independent and multi-regional retailers, is riding out the recession through cost cuts, opportunistic buys, and boosts from ancillary businesses like home office, accessories and audio.

"We're still here, still competing and learning to play in this environment," said president and executive director Bill Trawick during the group's annual conference.

Elsewhere, optimism, mixed with concern about the holiday season's prospects, set the tone for retailers and suppliers at CEDIA Expo. "I see greater optimism by retailers," said D&M Holdings' Bob Weissburg. "From what some have told me, there is guarded optimism about the market."

Best Buy's outlook was even more upbeat, as the "relative value" of CE products "has never been greater," newly installed CEO Brian Dunn told investors on a second-quarter earnings call.
Brand Source Reports Double-Digit Gains

Despite the brutal marketplace, total revenue for the Brand Source buying group grew more than 16 percent year-over-year to $14 billion, buoyed by brisk sales of TVs and gains in such ancillary businesses as rent-to-own and floor coverings, executives reported during the organization's 40th anniversary convention.

Meanwhile, members of MEGA Group USA, the 1,400-dealer buying organization, were cautiously optimistic about the coming fourth quarter and "showed up to do business" at MEGA's fall convention, president Rick Bellows said.
OCTOBER

CE Gift Sales To Rise 8% In Q4: CEA

The CEA predicted that CE gift sales will grow 8 percent during the fourth quarter compared with 2008, although deep discounts and special retail events will be needed to get consumers into stores and shopping online.

The forecast mirrored projections by consumer TV analysts who expected aggressive holiday pricing to drive strong unit sales growth in 32-inch and smaller screen sizes and 40-inch-plus models priced less than $1,000.
HTSA Dealers Diversifying

Members of the HTSA are coping with the recession by bolstering their businesses with new products and services, the buying group reported during its biannual meeting. After cutting costs through staff and inventory reductions, member dealers, custom installers and system integrators added new categories like high-performance networking and LED lighting fixtures to help supplant slower sales and position themselves for a bonanza when the economy recovers.
Majap Dealers Hope Rebates Can Boost Biz

The U.S. Department of Energy is expected to approve state-level plans to administer its $300 million appliance rebate program. The subsidy plan, which incentivizes consumers to purchase efficient, Energy Star-rated majaps, water heaters and lightbulbs, is expected to "have a major impact on sales," said Bosch's John Farley. The rebates could spur retail sales by as much as 20 percent, he projected.
NOVEMBER

CE Helps Draw Bigger Black Friday Crowds

CE deals remained a top retail draw during Black Friday weekend. But while the doorbusters helped lure a larger number of shoppers to stores and Web sites, they left fewer dollars on the table than last year, surveys showed.

According to a poll by the National Retail Federation (NRF) and BIGresearch, nearly two-thirds of Americans, or 195 million shoppers, visited stores and e-commerce sites over the holiday weekend, up from 172 million last year, and more than 77 percent of them bought CE, computers, video games, music and movies, or books, the survey showed, up from 75 percent last year.

But according to point-of-sale data collected by The NPD Group, total CE volume was down 1.2 percent Thanksgiving week to just over $2.7 billion, due in some measure to price compression and the dilutive effect of a promotional period that began as early as the first week of November.
CE Revenue Down 6% In Q4: CEA

Fourth-quarter sales of CE devices will fall 5.9 percent in dollars but climb by the same percentage in units, according to a revised forecast by the Consumer Electronics Association. The dollar decline comes on top of a 6.4 percent drop in revenue during the year-ago period, although unit volume rebounded strongly from last year's 6.3 percent decline.

GPS devices led this quarter's revenue retreat with a 51.8 percent decrease year over year, while A/V - including MP3 players and camcorders - had the mildest decline at -2.7 percent. GPS also saw the steepest slide in unit volume, down 27.3 percent from last year, while computers showed the strongest unit growth with a 17.3 percent gain.
DECEMBER

Sales At CE, Majap Dealers Improving

Sales at consumer electronics and major appliance specialty stores are steadily improving, according to the U.S. Census Bureau. The agency's latest monthly retail data showed that sales for the sector rose 2.8 percent in November over October, to nearly $8.8 billion, while October sales rose 0.3 percent over September's tally.

What's more, sales from September through November rose 3.5 percent over the June-August period for the CE/majap channel.

On a year-over-year basis, November sales slipped 3.4 percent from 2008, but the rate of decline eased from a 5.5 percent drop in October, the Census Bureau reported.

Release Date: 
2009-12-21 17:48:24
Expiration Date: 
0000-00-00 00:00:00
Workflow: 
online
Abstract Web: 
The year began with a whimper as dealers and vendors tried to find their footing following a dismal holiday season.
Article Type: 
News
nstein articleid: 
441361
createdBy: 
8668