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Questions Loom As New Year Begins

Now that the frenzy that is International CES is over and January is ending, it is time for many of us to reflect on what we learned in Las Vegas and what may be in store for the industry in the new year.

To this reporter, as 2013 begins, there seems to be more questions than answers.

Granted, as I wrote in our last issue, International CES was a great success. The show floor was packed and — if it translates into retail sales — could mean this year may be a great one. But even the Consumer Electronics Association (CEA), the show’s owner and producer, estimated that manufacturer shipments will only be up 2.7 percent. TWICE’s Retail Roundtable participants expect a low growth year.

The good thing, at least I think so, is that we will finally get some answers — or at least some indications — about some of these questions pretty early on.

For instance, we should find out by February if Dick Schulze will be successful in taking control of his creation, Best Buy, once again as a privately held company, barring another delay. Whether Best Buy goes private or remains public, its strategy will change and affect suppliers and competitors.

Unilateral pricing policies, and other plans with similar intent, will move into their second year, with suppliers looking to expand programs to add more SKUs. This is still a work in progress, and it will be interesting to see if retailers chafe against more rules, even if it means higher profits on some types of products.

For Japanese-based manufacturers we should see how things are progressing — or not — with these plans when we see their fiscal year reports this spring after their March 31 deadline.

Ultra High-Definition TV took much of the CES spotlight early in the year, and sets will continue to roll out this year. The “ultra” high price tags will supposedly make this a small percentage of the overall U.S. TV market now, and at least through next year. Still, the margins are high, and it will be a pretty good barometer on the overall economy as to how well they sell this year.

And while TV and home-theater makers are enabling smartphones and tablets to control just about every function of home systems, the ongoing question remains: Can traditional electronics/ appliance retailers cash in on the mobile trend?

If not, what other larger-ticket items will these retailers lean on to generate growth and profits? Home technology systems? Lifestyle and health care products? Car electronics? Furniture and mattresses? Or will it be some combination of all of the above?

And, finally, at press time, Apple released its financial for the holiday sales season: record sales (but not as high as some predicted), and flat profits from the prior year (only $13.1 billion). Wall Street’s initial reaction was swift — the stock price sank. Analysts are worried about lower prices and competition.

Well, welcome to the consumer electronics industry!

Rarely do assumptions made in January hold true by late June or beyond for electronics/appliance retailers. Heck, maybe the economy, which has shown some recent strength, may actually kick into gear. We can only hope.