By Lisa Johnston
New products on display at the American International Toy Fair, held in N
"Traditional car stereo sales are down approximately 13 percent in units and 18 percent in dollars through May, according to The NPD Group." — TWICE, July 7, 2003
"Sales of home audio systems dropped for the ninth consecutive month in March, when a 24 percent decline brought sales down to a nine-year low of $105.2 million." — TWICE, June 6, 2003
"There's something happening here. What it is ain't exactly clear." — Buffalo Springfield, 1966
Something's happening, all right. The economy, of course, at least to a point, or the war in Iraq, or rather the lack of peace since it ended.
But is that really it, or are we suddenly at the end of the industry's "ride"? Absolutely not, but (and I am going to repeat myself now) you cannot continue to do business as before, be you a manufacturer or a retailer. If you do, you risk much more than simply puzzling over sales declines.
The July 12 edition of The Economist includes an outstanding special report entitled, "Who Gets Eaten and Who Gets to Eat," a compendium of current thinking on how to prosper rather than simply survive in today's world. One of the main arguments has to do with avoiding what they referred to as "cultural lock-in," citing IBM as a case in point:
"It helps explains how John Akers, a dynamic computer-industry lifer by the time he became boss of IBM, could make such a mess of the job. All his energy, astuteness and intelligence could not help him to see how his company was being swept into a waterfall by changes bubbling just beneath the surface of the industry."
Do you understand what is "just below the surface" in terms of the new consumers to which you expect to sell? They are decidedly not culturally locked in to you, your company or your products.
Consider a scientific sample of my father and me. By the time of his death at 84, he had over the course of his lifetime purchased two houses, 10 new vehicles, another 15 or so used cars, three TVs, and no PCs, car stereo, home stereo or cellular phones.
At age 55 and with presumably many more consumer years ahead of me, I have bought six houses, over 20 new vehicles, half as many used cars, more after market car stereo than I can recall, 10 TVs, around $100,000 in home A/V products, too many cellular phones and PDA's to remember, and God only knows how many PCs.
All of those differences in one generation between two people presumably with similar DNA.
Spend just a little time considering those facts along with some other readily available data to see how cultural and technological change has affected your business to date and will continue to do so in the future. I am not what my dad was at 55 anymore than my 17- and 20-year-old boys will be like me when they reach 25, 30, 40 and older. And continuing to market to people as though that were not the case is why you are where you are today.
What's at stake? The bad news is it's the current state of sales; the good news, however, is that it can be way better than it is.
While the CE industry can go on to a renaissance few think possible, it can also become a mere footnote in the story of some other industry's acquisition of the hearts and minds of consumers. Your consumers! But you can do something about it. There is something happening here that is not exactly clear but it also not completely unknown. Think about it.