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Merchants Preparing For Merry, But Not Phenomenal, Q4

NEW YORK — Based on a slowly recovering economy but continued softness in the core TV category, merchants are predicting a merry, though hardly miraculous, fourth quarter, which will be bolstered by giftready tablets, fashion headphones, wireless speakers and next-generation gaming consoles.

“There’ll always be a Christmas and business will swing up, but I don’t know if Santa will have a 5-pound bag or a 10-pound bag of toys,” said ProSource president/ CEO Dave Workman.

The buying group chief is already labeling the holidays “a gaming Christmas” due to pent-up demand for Microsoft’s Xbox One and Sony’s PlayStation 4 platforms, which represent the first major updates in eight years. He also anticipates “great energy” around soundbars and especially Bluetooth speakers, which he described as an “absolute runaway success.”

But TV remains a sore spot, he said, with 55-inch step-up series struggling as volume shifts to promotionally priced 60-inch and larger displays, and 4K and OLED still too new to make an impact.

Bill Trawick, president and executive director of the NATM buying organization, concurred. “Most of our guys are anticipating a flat holiday season for TV,” he said of his independent big-box membership, “and manufacturers are building for flat to lower growth.”

While strength in furniture and white goods is compensating for video, holiday attention is turning to tablets, a relatively new category for NATM that has been “extremely strong” for the group.

“We’ve never been big players in tablets, but with Samsung and other NATM vendors getting into it, a lot of our guys have too,” Trawick said. “It gets consumers into stores and is a good business if you can sell some add-ons.”

RadioShack, which abandoned the TV business several years back, will play up its strengths in smartphones, tablets and wireless audio. “I’m optimistic about the fourth quarter,” CEO Joe Magnacca told TWICE. “We’ll be better positioned for the holidays than ever before, as our stores will be remerchandised and a lot of new product innovation will kick in.”

Among the latter: a see-through wireless speaker with illuminated wiring that will join other proprietary products planned for the holiday season, he said.

Tom Hickman, electronics senior VP for the $14 billion Nationwide Marketing Group, is also bullish on the back half. “I think Q4 will be strong,” he reflected. “All economic indicators are pointing up, consumer sentiment is good, and we have relevant new technology in 4K. We always plan aggressively and are encouraging our members to do the same.”

Despite predicted softness in the PC sector, D&H Distributing is optimistic about the holiday season overall, and is forecasting increased purchases over last year buoyed by aggressive holiday sales. Senior sales VP Jeff Davis is advising his retail customers to focus on hot areas like tablets and other mobile devices; the new gaming consoles; and connected CE including Internet TVs, streaming devices and personal Cloud storage.

D&H will also continue to expand its assortment of non-traditional CE items with do-it-yourself connected devices such as door locks and thermostats; Wi-Fi home environment control; security; small appliances; and wearable technologies like the Fitbit wireless activity wristband.

Similarly, Bob & Ron’s World Wide Stereo, the Philadelphia-area A/V and custom-installation and integration chain, is diversifying into LED lighting and furniture, although “at heart, we sell things that turn on,” president Bob Cole said.

New Age Electronics, the IT and CE distributor, is giving its PC dealers a boost for the holidays by extending availability of its electronic software download (ESD) platform, which allows them to load products by Microsoft, Adobe, Symantec and others developers directly onto a device in the store. President Fred Towns said the initiative allows their customers to walk out with a more complete IT solution.

Warren Chaiken, president/COO of national distributor Almo, thinks the most “noise” will come out of the mobile digital health category, which he predicts will become the Next Big Thing. Devices like Jawbone’s Up bracelet, which tracks wearers’ sleep and steps, are doing very well for him and his customers, and are “just the beginning” of a new demand wave.

All told, Chaiken expects the industry will have “a decent, not fantastic” fourth quarter, and that short of a major geopolitical or economic disaster, “Christmas will come. People like to buy stuff during the holidays.”