By Steve Smith on Jun 6 2011 - 6:38pm


It's No Longer 1999

If you haven’t noticed it by now we are well into the 21st Century.

Yeah, I agree this isn’t a “Stop the presses!” moment. Or more to my point, “Post and blast this now!” story. But I’m talking about trends in the CE business, so bear with me.

One thing that hasn’t changed in the CE business since 1999 is predatory pricing and scant margins.

Here are a handful of things have changed in CE since then. After a decade of focus on big screens and HDTV, tablet PCs and smartphones are all the rage. PlayStation Network has become a vital business element for Sony, which makes its hacking all the more serious. (Heck the Pentagon reportedly said last week that computer hacking could be “an act of war.”) Samsung, once a low-end CE supplier is now number 1 in TV sales in the U.S., according to NPD Group. Today’s connected TVs have more “computer” firepower than the PC TVs which debuted and died in the 1990s.

The fear back then was that dot.com retailers and manufacturers running their own stores would become major headaches for established brick-andmortar stores.

If you took a close look at the TWICE Top 100 CE Retailers Report which we released May 23 and you can see the future is now. Number 4 Amazon.com had a 72 percent CE sales gain during calendar year 2010, and Number 3 Apple Retail Stores had a 25.8 percent sales gain.

Forget that Walmart with CE sales more than double that of Apple Retail Stores and Number 1 Best Buy, which has four times the CE sales of Amazon. The talk of the industry - and Wall Street - has been Numbers 3 and 4.

The size of Best Buy’s stores - traditionally seen as a strength - is now considered a weakness by some along with the perception (I stress the word perception) that it doesn’t do a good job online. Walmart clarifies in this issue of TWICE how its revamped CE strategy which rolled out last year is performing and how it is tweaking it in 2011.

Apple has thrived not just because it designs great products and knows how to sell them, while Amazon, a retailer by trade, has become immensely popular not just because it has created a winning hardware/software ecosystem for CE products.

Apple and Amazon seem to play by different rules - and I don’t just mean the whole controversy on the latter’s local sales tax advantage. They seem to know today’s trend-setting consumers - people that were entering high school in the late 1990s - better than anyone.

This demographic has grown up with the internet and tech. They think they know more about technology than the people who run the CE industry. And in some cases… maybe they do.

These new consumers shop and do research with their smartphones and computers (the latter which is supposed to be supplanted by tablets, and quickly) at home and in your stores. And they only have brand loyalty - for a manufacturer or retailer - to those companies that understand their wants and needs.

The lesson to be learned is to know your customers’ wants and needs, and learn it quickly, because the pace of change is something else that has intensified in the past decade and five months.

This column originally appeared in the June 6 issue of TWICE.

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