Last week, the Consumer Electronics Association (CEA) said in its biannual factory-to-dealer sales report that there will be a 2 percent increase for calendar year 2014 and a probable 1.5 percent increase for 2015.
A 2 percent growth prediction for 2014 sales followed by a possible 1.5 percent increase next year is minimal. Still, some retail execs everyone knows may call any prediction of CE growth this year a fantasy.
The 2 percent growth for this year is understandable since the industry really was hurt badly due to the weather in the first quarter, which is the second most important period for CE after the holiday season, and it seems like it won’t recover from a slow start.
CEA also reported that the category sales leader in the industry is smartphones, whose dollar sales will increase 7 percent this year. If you remove that growth, overall CE sales would be flat or down for the year.
For most years in the post-World War II era, TVs (and later the entire video category) led category sales in CE.
The popularity of smartphones, and its running partner, tablets, since around 2009 is why independent electronics retailers, electronics/appliances dealers and custom installers wonder how CEA is predicting growth when they have trouble staying flat in sales comparisons over the past several years.
For whatever reasons – scant margins, control of the market by carriers, the “walled garden” marketing approach by Apple – traditional CE retailers have not been able to – or made the choice not to – carry those products.
That’s why when you go to the buying group meetings next month, the show floors will look more like home-furnishings events than ever before, filled with bedding, furniture and outdoor living products.
Independents had to go with these large and profitable home-related categories to make up for volume, and profits, that they were losing in CE. And that has been the trend for the past couple of years.
What is new is that there are some rays of sunshine in CE for these types of retailers for this year and the future if you believe the CEA estimates and comments from independents in our special “Christmas In July” report.
The clear-cut star of this holiday season should be Ultra HD, whether or not there is 4K programming available, according to CEA and the retailers TWICE spoke with in recent weeks. Tier-one TV makers will promote these large-screen sets, and their prices will come down. The real hope is that margins will not suffer too much in the process, and that this new format will draw consumers to stores and websites nationwide.
While there was no widespread consensus on other categories, the retailers TWICE spoke with either see potential growth during the holiday season, or definitely during 2015, in home automation, high-resolution audio, wearables, headphones and video games.
There just won’t be one, be-all, end-all hit product category, so retailers will have to carefully pick the brands and the categories they want to invest in during the holiday season more closely than ever before, if they are serious about growth and profitability.
This column was originally published in the July 21 print issue of TWICE.