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Business Is Better… But Anxiety Still High

This year’s PRO Group spring meeting is different due to its location, the St. Regis at Monarch Beach and the official word, at least from executive director Dave Workman and his members, that first quarter sales were up 8 percent and that the year may be a good one.

But the undercurrent here in informal, not-for-attribution discussions with both retailers and manufacturers since Tuesday, illustrates continuing anxiety over consumer demand and the struggle to close sales and meet monthly budget numbers.

That anxiety is always in the background at any buying group meeting in this industry over the years, in good times or bad. It has become more pronounced over the past three years since the dawn of the Great Recession.

As one manufacturer put it, “We are having a good year, making a profit, but we have to promote more [to beat] last year’s numbers.”

So what are their concerns?

There was talk of the latest up-and-coming CE retailer, One retailer complained, “Since they provide the ‘best price’ for existing customers that buy anything, it makes it very tough for us to compete on price.”

This retailer noted, “What manufacturers have to do, if they want diverse retail channels that can sell their lines profitably is to differentiate their lines for Internet sales,” a sentiment executive director Workman mentioned in a press briefing Tuesday. “Some are learning to do that [differentiate lines] online as well as with brick and mortar” retailers.

As for the rumblings of taxing Internet sales that Best Buy and others have discussed, one manufacturer noted, “That has to happen when you consider that so many states are in debt and can’t balance their budgets.”

One retail executive is waiting for the oft-discussed “Apple TV. There shouldn’t be anything to stop them from entering the flat-screen market and if they do, with their stores, their cult-following, they can control the pricing, the [marketing] message, the content for it and inventories. It will be a game-changer.”

Speaking of inventories, retailers as well as manufacturers don’t have a clear handle on when or how severe shortages will be this year due to the Japanese earthquake and tsunami.

“Between components and energy availability to run plants [in Japan], no one really knows,” a PRO member said.

Another member said, “We expect some type of shortages, but we can’t predict it. The only benefit after this terrible tragedy is that it might stabilize prices in the industry. Some manufacturers might learn that they don’t have to overproduce, especially low end products.”

But the main concern on the minds of many is how the industry has changed since the go-go years of 2000 to 2008. No one can afford to run their business on “automatic pilot” even for a short time.

“Business is better now,” a retailer said, echoing the sentiments of many, “but it has its ups and downs. It isn’t steady. You have to prove yourself every single day.”

Two longtime PRO retailers lamented the demise of two former members, Flanner’s and Ken Crane’s, on a personal and professional level. “You know Flanner’s had only been around for more than 100 years,” commented one member, “And Ken Crane’s was a leader in [the Southern California] market for years.”

A fellow retailer volunteered, “The demise of those types of retailers… as well as Circuit City diminishes the industry.”

So, while business has improved for PRO-type retailers the anxiety level in the industry continues to be high… as always.