NEW YORK –
For a year that saw TV pricing stumble, Sears and Best Buy fumble, and top 40 A/V chain Sixth Avenue Electronics crumble, CE sell-through was surprisingly solid in 2011.
Cumulative sales for the industry’s 100 largest retailers rose 5.2 percent last year to $133.2 billion, off slightly from 2010’s 5.8 percent increase.
But as TWICE’s annual Top 100 CE Retailers Report shows, the gains were concentrated among a handful of fast-track companies, offsetting widespread declines among ranking dealers and masking a more fundamental weakness within the CE retail channel.
The data, compiled by market research partner The Stevenson Company of Louisville, Ky., also captured the seismic shifts that are reshaping the industry, as consumers adopt new shopping behaviors, and old go-to-market models are being upended by the very technology retailers sell.
Perhaps the biggest beneficiary of the new world order is Amazon. com. CEO Jeff Bezos invested billions in infrastructure over nearly two decades, leaving his brainchild perfectly poised to catch the e-commerce wave as consumers took to their computers and smartphones during the recession to compare prices and save gas. Tens of millions are drawn by Amazon’s often break-even prices, its popular Kindle portable devices, a growing pool of content and third-party sellers, and the web’s lax tax status.
To add insult to injury, the company even offered a 5 percent discount to users of its mobile shopping app last holiday season to further encourage showrooming.
The net effect: Amazon’s CE sales skyrocketed 52 percent last year, and the e-tailer leapfrogged Apple to become the No. 3 CE source behind Walmart and Best Buy.
But don’t cry for me, Cupertino. That sucking sound you hear is the diversion of billions of dollars of disposable CE income to Apple’s brilliant handheld products and ecosystem, which has effectively body-checked much of the consumer electronics industry. Those who have been granted access have paid the price in lower margins and profitability (see RadioShack and Verizon), while the migration to mobile that was fomented by iPhone and iPad has further undermined TV sales, long the cornerstone of this business.
Together Apple and Amazon accounted for $23.2 billion in CE retail sales in 2011, or 17 percent of the Top 100 universe, up from 13 percent the prior year.
But the double A’s weren’t CE’s only success stories in 2011. On a smaller scale, Anaheim, Calif.-based Paul’s TV posted an 86 percent sales spike year over year – the most of any ranking retailer – with a novel brick-and-mortar strategy that placed it firmly within the top 50. Partnering with regional furniture chains around the country, the 48-year-old business has leased scores of in-store hometheater shops to leverage the traffic of the burgeoning home furnishings category.
Also showing hefty gains was six-year-old Simply Mac (No. 89), a Top 100 newcomer that grew its top line by 67 percent by riding the MacBook wave and adding three stores. InMotion Entertainment (No. 76), the airport CE chain, similarly accelerated sales, by 27 percent, by opening eight new locations as airline travel rebounded.
Still, stiff online competition, TV commoditization, and in some instances store closures left the majority of Top 100 dealers showing single- to double-digit sales declines last year. None was steeper than Sixth Avenue’s, which fell 67 percent as the company shut its three remaining locations. Once the reigning New York-area A/V champ with 19 stores in four states, it was felled by over-expanding – rather than transforming – amid the market forces that are rapidly restructuring the retail landscape.
The TWICE Top 100 CE Retailers Report ranks the leading domestic CE dealers by sales of consumer electronics.
Sales figures are based on information that was supplied by retailers responding to a 300-dealer survey by TWICE and its research partner The Stevenson Company. Absent retailers’ input, estimates were developed from Stevenson’s internal market tracking surveys (TraQline), industry sizing based on wholesale shipment figures from the Consumer Electronics Association (CEA) and other sources, and average retail price points by product.
All estimates were further refined through the use of public filings with the Securities and Exchange Commission (SEC), TWICE industry analyses, retail analysts’ financial reports, published data and other external sources.
Once the estimate was determined to be a reasonable assumption of the retailer’s CE sales, the figure was broken out by product category based on the TraQline surveys.
Sales figures by total and by category for 2011 were then compared to 2010 sales tallies, and adjusted if necessary to more closely track total reported revenue growth.
Businesses must meet the following criteria to be considered consumer electronics retailers and to qualify for inclusion in the Top 100 report:
• sells new products directly to consumers;
• has physical retail store locations, or has a significant online presence;
• sells consumer electronic products as one of its principal lines of business;
• does not offer consumer electronics products primarily to sell its transmission services, i.e. wireless carriers, cable operators, satellite radio/TV providers; and
• sells merchandise that is considered consumer electronics products as defined by the CEA (see product definitions at right).
Sales are considered to be the revenue received for the products sold primarily to consumers, including CE hardware and accessories; personal computers, peripherals and software; and video game platforms and software.
Sales of prerecorded music CDs and movie DVDs and Blu-ray discs are excluded from the report.
Respondents were also instructed to exclude revenues received for installation services, repair services, rentals, extended-service contracts and vendor marketing support, as well as sales to the business, government and education channels.
Based on The Stevenson Company’s proprietary methodology, a refined baseline was developed for this annual project effective with the 2005 Top 100 CE Retailers Report, our first collaboration, covering the years 2003 and 2004. Therefore, comparisons with Top 100 reports issued prior to 2005 would be imprecise.
The Stevenson Company, based in Louisville, Ky., began as the global economic analysis and research department of GE Appliances. Now independent, the market research firm has served the consumer electronics and major appliances industries for the past 16 years by developing markets sizing and market share estimates.
Its TraQline syndicated quarterly survey of 150,000 shoppers measures retail purchases of consumer durables and provides estimates of unit and dollar market share and other key measures.
What Is a CE Product?
As defined by the Consumer Electronics Association, here is a breakdown of what constitutes a consumer electronics product and what was included in the Top 100’s sales totals:
batteries, cables, miscellaneous accessories
home speakers, receivers, CD players , (home and portable), home theater in a box, pocket and portable radios, boomboxes, MP3 players, docking stations, distributed audio products, mini stereos, clock radios, headphones, blank recordable audio media
corded and cordless phones, answering machines, fax machines, pagers, cellphones and smartphones, PDAs, CB radios
VCRs, Blu-ray and DVD players, DVD recorders, hard-disk recorders, satellite TV dishes and systems, camcorders, TVs and TV/ VCRs/DVD/Blu-ray combos, blank recordable video media, video game players, video games
Desktop/notebook/ netbook/tablet PCs, e-readers, monitors, external drives, networking products, optical drives, printers, software, accessory hardware (cards, hard drives, keyboards, mice, etc.), digital cameras, flash media
Car speakers, car radios, car CD players, car amps, satellite radios, radar detectors, burglar alarms, GPS, mobile TVs, video monitors, car media players, car receivers