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Holiday sales should be tough to predict at best, said industry veteran Jeff Kussard, strategic development director of Capitol Sales, in a discussion with TWICE about the distributor's view of the season and his company's plans.
Kussard said that holiday sales are important to Capitol Sales, even though it serves diverse channels, such as residential systems, premium incentives and the jobber channel, as well as retail.
“Our base and our strength is still with retailers in the 'exhurbs' and farther out, so the answer is [holiday sales] are very important to us.” Kussard noted that in the dire fourth quarter of 2008, “Our retailers kept us buoyant ... small-market retailers are important to us.”
He said that in those communities, “it is not uncommon to get in a car to drive long distances to do shopping,” yet those consumers “have a tendency to go to hometown retailers. With some big-box guys singing the blues in the fourth quarter last year, [independent retailers] carried our business last year. Small-town America works when times are tough.”
Kussard pointed out that most lines Capitol represents “have restrictions on them. We don't do much with online retailers. Some brands permit us to sell to Web retailers, but it is a very minimal component.”
When asked about the month-long “Black November” of this year, Kussard noted, “I have a concern about holiday promotions in a general business perspective. When everything is on sale, nothing is on sale, and it seems to move into that mode. If you are desperate to get any dollar from a consumer, and you entice and entice, we dilute what we have to offer.”
He added, “I'm not saying I have a better suggestion, but when you try to keep consumers' dollars flowing this way, you are heading down a slippery slope.”
What Capitol is recommending to its customer base is a “blended message” since it sells to different channels, Kussard said.
“We stress looking for business opportunities that they may have overlooked or that are emerging for longer term. As an example, flat-panel display is still a key to the CE consumer. The most visible topic in that area is HDMI and how to install it. There are certain 'gotchas' in the HDMI world that generate frustrations. We have to educate ourselves to support our dealers in that business.”
Capitol is advising its customers to embrace new, emerging technology and lifestyle trends, such as the “No New Wires” initiative. “From a fashion point of view, we see a tipping point in the next calendar year, with new business opportunities, updates in training and education,” he said.
Green initiatives and energy saving can be an opportunity if “consumers see the value in it and savings in their pocketbook in everyday life. If consumers want to be socially conscious and … they can save money, there are opportunities,” Kussard said.
He noted that in the Capitol Sales lineup there is a “heavy focus on Energy Star-compliant products. We support programs that focus on financial benefits of Energy Star products. On the merchandising side, we have also begun offering technology and products that focus on energy consumption. LED lighting has become an interesting product for those retailers to support.”
On the residential contractor side of the business, Capitol is going to focus in 2010 on “moving away from price and exploring new business opportunities,” such as energy savings, HDMI, No New Wires and light commercial installations such as hotels, Kussard said.
Coming back to the holiday sales season, Kussard said the entire year has been “rough and tumble” with daily and weekly sales spikes going up and down. “Anyone who attempts to gaze into a crystal ball should be wary ... but from my perspective, if we can run flat at the end of the holiday season, we'll be happy.”
He expects some spot shortages in “high-demand products and high-demand price points,” but no across-the-board problems.
Kussard's concern, echoed by many in the industry, is that with consumers shopping for bargains, “price points will remain in the lower ranges” past the holidays.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.