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Stores Cite DVD As MVP For ’98

For consumer electronics retailers, 1998 was quite possibly the best of all times.

With consumers flush with disposable income from a still expanding economy, and their first taste of digital products – particularly DVD – piquing their curiosity and loosening their pocketbooks, it’s little wonder that the industry’s top 100 merchants saw their sales rise 11.5%, as tabulated in the TWICE 1999 CE Retail Registry.

Indeed, both DVD players and software were repeatedly lauded by CE retailers as the product pile driver that helped make a solid sales year stronger.

“Business was pretty good,” said Jerry Throgmartin, president of H.H. Gregg (which placed 62nd on TWICE’s Top 100), as well as president of the NATM Buying Corp. Noting that if stores couldn’t thrive in 1998’s business climate he didn’t know when they would, he said that “most NATM members were pleased, and I think both retailers and manufacturers were pleasantly surprised” with their year-end tallies.

Leading the charge, said Throgmartin, were the “super hot” DVD category specifically and the digital universe in general for both rekindling consumer excitement and helping to raise the bar on pricing.

Dick Schulze, chairman/CEO of Best Buy, which ranked No. 1 on the Retail Registry for the third consecutive year, concurred. “The digital category represents an opportunity to raise prices,” Schulze said, “and DTV is the direction we want to go in. Would a little inflation be such a bad thing? I don’t think so.”

Meanwhile, 1998 sales of DVD players at Best Buy “far exceeded our highest expectations,” reported executive VP/marketing Wade Fenn, prompting him to describe the product as “by far the runaway consumer electronics gift” of the year.

Similarly, DVD software also took flight for the superstore, which sold $1.2 million in movies on the day after Christmas, outselling VHS titles for the first time.

Digital devices were also cited by No. 2 retailer Circuit City for leading the store’s growth in consumer electronics last year. According to chairman/CEO Richard Sharp, DirecTv, wireless communications, digital camcorders and DVD players in particular contributed to “an acceleration in the sales pace” of CE products.

While appliances are Associated Volume Buyers’ bread and butter, AVB and Sure Appliance president DeMar Young said that “most areas were slightly up from the year before. It was a pretty good year for us. We kept slightly ahead of the industry.”

Although many AVB members got off to a weak start in 1998, noted Young, the stores made up for any shortfalls later in the year, particularly during a fourth quarter that he described as “real strong” for most of the group.

Young attributed some of AVB’s sales success last year to the greater attention being paid to independents by the major suppliers. “We’ve seen a little more emphasis on the independent dealer by manufacturers, who tend to swing between us and the big-box stores. But last year they gave us a little more focus and help,” he said.