The PRO Group, both individually and as an organization, is “cautiously optimistic” about current and future market conditions for the second half.
Executive director Roger Heuberger said that since last fall, PRO sales have gone something like this on a monthly basis: “The ‘lows’ are not as low overall, and the ‘highs’ are higher, so we are optimistic.” But he added, “There is some regionality. Business in the Midwest is slower than either coast.”
Group president, and president of Indianapolis-based Ovation, Gary McCormick, said for his chain, “We are upbeat because our sales are not off. Video is great, 12-volt is doing well, but home audio is still struggling.”
Heuberger noted that store traffic is still on the minds of many in his group. “Getting new customers into our stores for a ‘first experience’ is really our biggest challenge.” The good news for PRO is that once consumers visit a member’s store “we have a pretty good chance that they will like us and want to come back.”
A serious potential problem in the making is a potential glut of HDTVs during the fourth quarter. “We are worried that there will be too much flat-panel and LCD inventory,” McCormick said. “With video going up, the margin on those products will be going down. There are some benefits, but it is difficult with video getting to be a larger and larger share of our business, so our margins are challenged” Heuberger noted.
And there is a lot at stake, according to statistics taken from the NPD Group from October 2003 to January 2004 that Heuberger cited in his dinner speech. He reported that in dollars during that period PRO Group members had 20 percent of plasma market share, 15 percent of micro display, 10 percent of the LCD and nearly 20 percent of the loudspeaker market.
He also noted that PRO members have had the most profitable mix in those categories, again based on NPD Group numbers for that period. Here are some of the details: CRT/color TV and rear projection TV pricing at PRO members were 25 percent better than the industry; micro display pricing was 15 percent better; LCD pricing was a whopping 40 percent higher; plasma was 30 percent higher; front projection was 35 percent higher in price; and camcorder price tags were 65 percent higher at PRO.