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The Evolution Of CE/Majaps Retailers

Electronics appliance retailers are evolving, and several stories appearing in this issue illustrate a trend that began a couple of years ago.

The one that generated the most interest last week was Best Buy’s fiscal second-quarter financial, in which the retailer reported solid net profits – based in part on cost cutting and other one-time items – but it did report $266 million in profits. That’s quite an accomplishment when you consider when CEO Hubert Joly was hired last summer and some on Wall Street thought his only job would be to slowly and carefully shut down the national chain.

Now, Best Buy hasn’t completely turned the corner yet – revenue was relatively flat year on year during the quarter. But Joly and his team have made necessary cuts, rolled out out Samsung and Windows departments (with probably more to come), and used its size as an advantage. With new display and mobile technologies, and new game systems coming into the pipeline for the fourth quarter, we will see how far this new strategy takes it.

In visiting the Nationwide Marketing Group’s Prime- Time! convention in Dallas earlier this month, the group reported overall growth — especially in its largest category, major appliances, but also in furniture (including mattresses) and “other” categories (riding mowers, generators, floor care, etc.). It even sees growth in CE.

TWICE is calling furniture and “other” categories in this issue “Profitable Alternatives” for electronics appliance retailers of all shapes and sizes.

As our reports from PrimeTime! and managing editor John Laposky’s feature on the products demonstrate, the sales of these types of categories is not a fad, but a long-term strategy for many retailers.

Conn’s, the regional chain that is the best example of the trend, turned its fortunes around with an emphasis on these categories and has begun an expansion plan.

Nationwide’s management team, and others at the convention, said in so many words that electronics and appliance retailers should use their expertise in selling large, sometimes complicated products — delivering and installing furniture, installing major appliances and selling add-ons when making an OLED TV sale – and accentuate the advantages they have over Internet-only retailers.

In a similar way, one Wall Street analyst I read last week said Best Buy should take advantage of its strength – the size of its stores – to open more branded departments, which can keep customers in their stores longer and enhance the brick-and-mortar shopping experience.

Some of the talk at Nationwide was about the demise of Sears and how its customers are now looking for the type of product selection and service it used to provide. Nationwide said its members’ strength — and I am sure Brand Source and Mega Group will say it too — can provide that type of service and selection.

When you look at the alternative categories that many electronics appliance retailers are selling successfully, as well as the new technologies that are about to hit retail in Q4, a sustained growth spurt for electronics appliance retailers is entirely possible.