NEW YORK – Following a hard-fought holiday season, consumer electronics dealers are looking forward to new technologies, an improving economy and more favorable vendor policies to propel retail sales this year.
Dealers said new – and earlier – introductions of advanced products, led by 3D TV, will also help shore up margins after last season’s bruising price battles.
“Each year the industry looks to bring something new and profitable,” Mike Vitelli, Best Buy’s executive VP, consumer operating group, told analysts last month during a conference call. “There are lots of things on the horizon to make the home-theater experience exciting,” he noted, particularly 3D TV. Best Buy will be finalizing its assortment of the new technology over the next month, and the company is projecting it will drive “a significant increase” in TV sales. “I hope James Cameron’s movie [Avatar] is an outstanding success,” Vitelli said of the 3D flick.
Identifying technologies with breakout potential is also a top priority for Michael Schwab, co-president of D&H Distributing. “It’s time to ask ourselves about the new consumer mindset,” he said. “What kind of merchandise and lifestyle are people picturing for themselves post-recession? Which electronics will justify what might be their first significant CE purchases in a long time?”
Schwab’s short list includes IP-capable TVs and external hard drives for viewing HD content via HDMI cable, e-books, smartbooks (a hybrid of the netbook and smartphone), Internet-based cloud media storage, competitively priced LED TVs and health-monitoring devices.
Also aiding dealers this year is tougher MAP enforcement by manufacturers, an earlier introduction cycle that will begin as early as March, and new vendor strategies designed to support independent dealers, including channel-specific models.
“We’ve been pressing for channel exclusivity for two years,” said Mike Decker, electronics marketing senior VP for the Nationwide Marketing Group, whose members sell more than $2 billion in CE annually. This year, he said, manufacturers are coming through with derivative models that provide a “one-up feature advantage” over mainline products, but can be sold at the same price.
Mike Fasulo, executive VP and chief marketing officer at Sony Electronics, said his company is focused on retail initiatives and MAP enforcement to “assist, improve and strengthen the specialty channel business in the U.S.”
“We need the specialty dealer to educate consumers and to apply their goods and services to customers’ needs,” Fasulo said. “Think about 3D TV and how to explain it. We need that network for CE to thrive.”
And according to a recent poll by the Consumer Electronics Association (CEA) and CNET, consumer confidence in the overall economy remained level in December while consumer confidence in technology products stood at the second-highest level of 2009.
Bill Trawick, president and executive director of the $3 billion NATM Buying Corp., expects that industry growth will begin to percolate in the back-half of the year, fueled by compelling new product lines, affordable LED and the improving macro-environment. “It may take a year or two to get back to past levels,” he said, “but if this economy can turn around, we’re all going to benefit from it.”
