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That Was The Year That Was: A Retail Retrospective

New York — The Chinese calendar claims that 2006 is the “Year of the Dog,” but some CE retailers may beg to differ. This year, the CE retail business model underwent a bit of an evolution with more and more retailers — both big box and independents — expanding their focus to include custom installation services to remain competitive in what might eventually be looked back upon as the year that custom home theater hit the mainstream mindset. This mainstream movement can likely be attributed to the growing availability of flat panel televisions as the year went on — a stark contrast to the shortages that many retailers suffered during last year’s holiday season and into the early parts of 2006 — and to their growing popularity as price points plunged.

Elsewhere, long-awaited product launches, like Sony’s PS3 and Nintendo’s Wii gaming systems towards the end of the year, coupled with pre-emptive holiday price-slashing, brought consumers into the stores in droves at the close of 2006 as well. While the final numbers aren’t in yet, retailers are hoping that Black Friday lived up to its name as the day that dealer profits moved into the plus column..

January (Images: HES image,1/16/06issue, pg 6; CES crowd shot, cover, 1/16; hedshot of Alan McCollough;)

CES Breaks Attendance Record: The initial attendance figure for CES 2006 was “more than 150,000,” the trade group reports, which exceeds the prior year’s show by 5,000. The show also drew 2,500 exhibitors using 1.67 million net square feet of space.

MARTA My Dear: The two leading CE/majap buying groups have “come together to create the industry’s strongest group,” says Bob Lawrence, executive director of Brand Soure. Together the two organizations represent over 1,500 member dealers and control about $5 billion in sales. SeparatelyHome Entertainment Source (HES), Brand Source’s A/V specialty divison, celebrates its 10th anniversary at International CES with 428 members, over 600 storefronts and $900 million in sales for 2005. In a related development, former MARTA executive director Warren Mann branches out to form a new buying organization, World Merchants Buying Group, to serve independent white-and brown-goods dealers who could benefit from the negotiation power of a buying group but do not require the additional services – and dues – offered by other buying groups.

McCollough Stepping Down: Circuit City chairman Alan McCollough says he will relinquish his CEO title to president Phil Schoonover on Feb. 28 and will retire in June. Meanwhile, Brian Dunn, Best Buy’s former retail president for North America, is tapped to succeeds Al Lenzmeier as president/COO at the start of the company’s fiscal year, Feb. 26. Dunn will retain responsibility for all United States stores and will assum additional responsibility for the merchant team, the customer business group and Best Buy’s services and small business functions. Lenzmeier had originally planned to retire but will instead continue as vice chairman.

Veteran Dealer Dies: Les Turchin, founder of the legendary New York metro area white- and brown-goods chain Tops Appliance City, succumbs to cancer at 63.

February (Images:headshots of Roger Heuberger, Dave Workman; Radio Shack- Babrowski headshot,2/27/06, pg 1)

A Change Is In The Air: The heads of two major buying groups, Roger Heuberger, president of Progressive Retailers Organization (PRO Group) and former PRO executive director Dave Workman, late of the MARTA Cooperative of America, both step down.. The departures, among other realignments at PRO, MARTA, Brand Source and Nationwide, areindicative of a larger shift in the roles that buying groups play in the industry, and could precipiate major changes in the way they do business in an ever evolving marketplace. Workman would later succeed Heuberger as executive director of PRO, returning to an organization he helped steer during his long tenure at Ultimate Electronics.

RadioShack Moves On: Following the resignation of RadioShack’s CEO David Edmondson over inaccuracies in his resume, Claire Babrowski is elected by the company’s board of directors to act as the president/CEO while a permanent replacement is sought.Babrowski also has the backing of Wall Street. “We believe Claire is the benchmark against which all other CEO candidates will be measured,” observes Banc of America Securities retail analyst David Strasser. “It is evident that she drove much of the changes that are set to take place over the next year.”

The Long And The Short Of It: Consumer demand for larger-sized flat-panel displays still exceeds supply in the early part of the new year, putting a crimp in dealers’ Super Bowl sales. Gregg Appliances confirmed that this was still the case in February and predicted that sales would continue to be impacted until late spring or early summer, when the pipeline was set to begin filling with products again. “It was particularly bad in January and it’s still severely constrained,” said Gregg president Dennis May of plasma TVs 50W-inches and larger.

March (Images: Nationwide management team, page 1,3/13/06issue; Trawick and Maund, from the March 27 cover; hedshot of A.J. Richard )

Wireless Wins Out: Mobile phones were the No. 1 “must-have” CE device for the majority (36.5 percent) of shoppers who participated in a nationwide survey by TWICE and Campaigners, a sales and marketing agency. The survey, which queried 2,620 consumers, also found other popular products included personal computers (32.3 percent), TVs (7.6 percent) and MP3 players (3.6 percent).

Nationwide Draws Record Crowd: Despite the loss to Hurricane Katrina of its original New Orleans Superdome venue, the Nationwide Marketing Group’s annual PrimeTime! meeting and convention held at the Venetian Resort Hotel Casino in Las Vegas is its largest ever, beating its own records for both attendance (about 400 dealerships and approximately 3,500 total people) and exhibitors (around 200). President/director Ed Kelly begins the proceedings by announcing that Nationwide grew nearly twice as fast as the white goods industry last year, although the group is only scratching the surface in potential CE sales.

MARTA Moves In: The MARTA Cooperative of America holds its first meeting under the aegis of its alliance with the larger Brand Source buying group and tells the industry that it will continue to function as an autonomous operating unit. “We have a tremendous amount of support from suppliers because they see efficiencies,” says chairman John Rice of DeSears.

NATM’s Biz Booming: A wave of new store openings and explosive sales of digital TVs and laundry products will propel the NATM Buying Corp. past the $4 billion volume mark this year, group officials say during the organization’s annual meeting. Sales soared $400 million to $3.6 billion during its current CE fiscal year alone, and will likely grow by another $550 million over the next 12 months, according to president and executive director Bill Trawick.

Say Cheese: Wal-Mart, the retail chain already considered to be the largest producer of digital prints, announces plans intended to help the company increase photo-printing sales beyond volume printing alone. Plans for expansion in the photo market included a partnership with HP’s online subsidiary Snapfish, an expanded trial of HP’s Photo Studio kiosks, and new moves to promote camera phone printing and online image storage.

A.J.’s Legacy: The late Alfred J. (A.J.) Richard, the longtime president and later chairman of P.C. Richard & Son, is recognized for his contributions to the industry and his 77 years with the New York area metro chain by being named to the Consumer Electronics Hall of Fame by CEA.

April (Image: picture of the Wal-Mart Prototype, P 24, 4/10/06 issue; Finley and McCormick, p. 10, 4/24 issue; headshot of Len Roberts)

Movin’ On Up: Wal-Mart opens an experimental upscale supercenter targeted at a higher-end audience than its traditional customer base. The new store, located in ritzy Plano, Texas, features a sizeable focus on big-ticket consumer electronics products intended to bring more affluent customers in the door. SKUs include a 42W-inch Hitachi plasma HDTV ($2,686); a 55W-inch Sony Grand Wega LCD RPTV ($2,794); and a 50W-inch Panasonic HD PDP ($3,477).

Circuit City Targets Custom Install: Circuit City unveils plans to implement a strategy to offer affordably priced home theater installation services in the second half of 2006. In making the announcement, Phil Schoonover, Circuit City CEO, says that the high-margin category is critical to the company’s long term strategy and that “high-quality installation at affordable prices” is particularly important as consumers prepare for the impending analog cutoff by switching to DTV.

Ovation Emerges From Chapter 11: Ovation Audio/Video Specialists emerges from Chapter 11 protection, takes on a new investor and creates a new corporate parent, called Phoenix Audio/Video LLC. The Indianapolis-based chain, which presently operates five stores, says it plans to expand its customer base by increasing its custom installation focus on families with more moderate means.

Roberts To Retire: Len Roberts announces his plans to retire from RadioShack within the month. The well-regarded executive is credited with revitalizing the chain in the late 1990s by adding high-profile brands like Microsoft, Compaq and RCA and showcasing them within vendor-funded kiosks and displays.

New Lease On Life: Harvey Electronics will receive a $4 million capital infusion from two private equity firms in exchange for four seats on the retailer’s board, including that of Michael Recca, under a plan designed to turn the ailing A/V specialist around.

May [headshot of Tony Weiss]

&C”Black”T0>Meet The New Boss: CompUSA president/COO Tony Weiss succeeds Larry Mondry as CEO of the national PC chain. He pledges to continue the company’s focus on the small business channel and to re-merchandise its A/V mix as CE and IT products and services increasingly converge. Mondry left the company after 16 years to pursue private equity ventures.

CE Sales Rise 11 Percent for Top 100 Dealers: TWICE’s annual Top 100 CE Retailers report shows that the industry’s leading dealers experienced combined annual sales of $108.5 billion in 2005. The report indicates that the impressive sales figures could be attributed in large part to the demand for products like flat panel TVs, Apple iPods, digital cameras and other in-demand devices. Best Buy ranked No. 1 in CE sales on the Top 100 chart, followed by Wal-Mart, Circuit City, Dell, and Radio Shack.

Circuit City Prepares New Format: Circuit City announces plans to implement a new home entertainment format in more than 500 of its stores by the end of the year as part of the company’s “Home Entertainment Innovation Project.” The centerpiece of the retrofit, as installed in a Nashua, N.H., test store, is an 8,000 square foot home entertainment area anchored by a 70-foot-long flat panel TV wall. The coming renovations are described by senior executives as the largest remodeling effort in company history.

RadioShack Re-entering TV: RadioShack will re-enter the TV business in a more significant way when it begins selling flat-panel LCD TVs in its stores next month. The chain will carry three brands in sizes up to 32W inches and will offer larger screen sizes online, acting CEO Claire Babrowski says.

Twelve-volt Venue: Industry members announce plans to launch what may be the first car audio and electronics volume buying group. Executive director Rob Elliot, former owner of Sound Waves, says the new group, called In Car Experts (ICE), hopes to attract 500 to 1,000 car stereo independent retailers who are tops in their respective markets.

June (Image:6/06/06, pg 24. Zoom Shop;Wal-Mart ad, p. 18, 6/6; Tweeter concept store, p. 16, 6/19; CompUSA store shot, p. 20, 6/19)

Office Depot Inks Geek Squad Deal: Office Depot is the first retailer to participate in an outsourcing test of Best Buy’s Geek Squad nationwide IT support program. Office Depot has begun offering the service in 11 of its stores in Florida. The occasion is believed to represent the first time that a national CE retailer is sharing a branded service with a direct competitor.

Wal-Mart Sell CE With “Wow”: Wal-Mart’s second annual media conference yields signs that the company is looking to revitalize its CE approach by “wowing” the customer. Such wow-tactics include revising visual merchandising efforts in some 1,300 CE departments with new TV walls and enhancing its traditional mass market brand selection by including higher-end names like Panasonic, Hitachi, Toshiba, and Sony Grand Wega, among others.

Macy’s Machines: Federated Department Stores announces plans to begin rolling out iPod-dispensing vending machines to 180 Macy’s locations nationwide in the fall in a project dubbed Zoom@@Macy’s. The machines are owned and maintained by Zoom Systems, a San Francisco-based company which had already been placing its “Zoom Shops” in high traffic areas like hotels and airports nationwide. The Macy’s machines were set to initially carry iPods and accessories, with the possibility of adding other-branded products to the mix at a later date.

Tweeter, The Next Generation: Tweeter Home Entertainment Group plans to open five concept stores this year, and will add elements of the new format to three existing locations. The prototypes feature a concierge desk, functional vignettes, a design center and other interactive elements to help demonstrate whole home solutions.

CompUSA, Take Two: CompUSA is expanding its A/V assortment with more brands and models, and is rolling out a new store format to house them. The new design, which has surfaced in two stores outside Orlando, Fla., features a significantly larger A/V area filled with premium products by Bose, Klipsh, LG, Mitsubishi, Nile, Pioneer, Samsung and others.

July (image: Julian Day headshot; Nokia store shot, p. 6, 7/3 issue; Best Buy Insignia plasma TV, p. 6, 7/17; pic of new Dell website, p. 26, 10/09)

Pioneer, Nokia Entering Retail Biz: Pioneer announces plans to open its first compay-operated store in the United States in August. The 3,200 square-foot shop, to be located in Orange County, Calif., will carry the full line of Pioneer and Pioneer Elite home A/V products and select mobile SKUs. The store will also test new merchandise, sell products not typically available in the U.S. and offer limited installation services. Meanwhile, Noika opens the first of four planned company-operated boutique stores along Chicago’s Miracle Mile. The upscale stores will feature interactive multi-media displays and will be located in high-profile, high-rent shopping districts around the country. A second store is slated to open in Manhattan in September.

Day Time: Julian Day, ex-Kmart CEO and a veteran of Sears, is named the new chairman/CEO of RadioShack. Many analysts in the industry laud Day’s appointment to the role because they view him as a retail turnaround specialist because of his notable role in leading Kmart out of bankruptcy. He succeeds Claire Babrowski, who had been named to the position in an acting role earlier in the year following the abrupt departure of former CEO David Edmonson. In other company news, the chain has begun selling flat panel LCDs by Akai in 650 stores. RadioShack will extend the rollout to all 5,000 locations in September, and will sell LG and Panasonic panels in 3,000 stores.

Best Buy Expands Private Label: Best Buy announced plans to launch its first private-label plasma display in the fall. The Insignia-branded HDTV will measure 42W-inches and be HDMI compatible with a retail price of about $1,500. The sets are expected to begin appearing in stores in August.

Oh What A Tangled Web: Dell says it will begin to dramatically reduce the number of rebates, special discounts and other promotional offers on its PCs, peripherals and CE products to make its pricing more transparent and less confusing for both customers and service reps. The company has also redesigned and simplified its e-commerce site, allowing customers to drill down by product category and customer segment, and to custom-configure their purchases in five steps vs. scrolling through “basically a glorified 300-line spreadsheet,” said senior VP John Hamlin.

August (image, Weedfald headshot)

CompUSA Retrenches: CompUSA says it will close 15 underperforming stores in 11 U.S. markets by November. Six stores are in California with the balance in Arizona, Georgia, Illinois, Michigan, Missouri, New York, Tennessee, Texas and Washington.

Weedfald Leaves Samsung For Circuit: Peter Weedfald, Samsung’s sales and marketing senior VP, leaves the company to join Circuit City as the chain’s senior VP/ general merchandise manager for entertainment/content. Six months earlier, Weedfald had been promoted at Samsung to executive status in Seoul, Korea, one of only five-non Koreans to share that status. He leaves Samsung at a time when the company is enjoying a significant rise in market share, revenue and profitability, thanks in large measure to Weedfald’s aggressive maketing and promotional campaigns.

RadioShack Pink Slips 450: RadioShack says it will cut its workforce by approximately 400 to 450 positions across the board to reduce overhead expenses and improve its competitive position in the marketplace. The cuts, to be completed by the end of September, were not unexpected: analysts say new CEO Julian Day pursued a similar game plan at Kmart.

Dealers Decry HD Disc Launch: Retailers gathered at a DisplaySearch HDTV Conference this month expressed disappointment in the handling of the launch of high-definition blue-laser optical disc formats. “This whole HD or high-definition DVD is probably the worst execution of a new technology release this industry has done,” said PRO Group’s Dave Workman, citing software glitches, a format war, HDMI compatibility issues and a hasty rollout.

September (image: TWICE @@ 20 logo; p/u cover shot of Ed Kelly, p. 1, 9/4; Bob Lawrence pic, p. 4, 9/4; hedshot of Roman Ross; firedog logo, p. 6, 9/11)

TWICE At 20: TWICE celebrates its 20th anniversary with a special edition commemorative issue that features a trip down memory lane through the highlight of the past twenty years in the consumer electronics industry. The special issue also features a variety of columns from the staff and various industry insiders. A joint CEA celebration party is also planned to take place in October in San Francisco.

Really Big Shows: Nationwide Marketing Group’s semi-annual buying convention, PrimeTime!, held at the Venetian Hotel in Las Vegas, drew 30 percent more attendees than the year-ago show. The organization reported that over 3,400 people attended the event from roughly 600 member companies vendors, representing a record turnout.Meanwhile, Brand Source says its recent convention and buying fair down the road in the Paris and Bally’s hotels enjoyed a 35-percent spike in attendance and exhibit space, making it the group’s largest show ever.

Meet The New Boss, Part II: CompUSA names Roman Ross, formerly an executive with Philip Morris,, as its new president/CEO, its third chief executive this year. Ross is replacing Tony Weiss, an 18 year veteran of the chain, who in turn replaced former long-time CEO Larry Mondry in May. Weiss says he’s stepping down to focus his time and energy on his family and new professional endeavors. Meanwhile, a published report says the chain is being shopped around to private investors by Credit Suisse, and Ross tells TWICE he wouldn’t rule out a possible merger or acquisition. “Everything’s always on the table,” he says.

Circuit Unleashes firedog: Circuit City rolls out firedog, its much-anticipated service brand under which the CE chain will market all of its IT and newly-launched home installation offerings nationwide. In-store and in-home support will be available through all 632 Circuit City stores beginning this month, from $160 for PC virus and spyware removal to over $900 for mounting a flat panel TV and connecting a basic home theater system.

October (image – Excellence In Retailing Logo,Issue10/9/06pg 20)

I’ve Got The Music In Me: Best Buy launches the Best Buy Digital Music Store, an online subscription music service powered by RealNetwork’s Rhapsody. It offers the same features as Rhapsody but also adds exclusive content provided by Best Buy. In conjunction with the launch, Best Buy also became the exclusive brick-and-mortar outlet for the new SanDisk e200R MP3 players which are designed to work seamlessly with the Best Buy music site and Rhapsody’s latest Version 4.0 service.

Computer Sales Crashing?: Two separate industry research firms, NPD Group and Gartner, see PCs and, to a lesser extent, notebook computers, losing sales to TVs, digital music players and installation services over the balance of the year. The reason? Lower flat panel prices and the delayed launch of Microsoft’s updated Vista operating system.

And The Winner Is…: TWICE announces the winners of its third annual Excellence in Retailing Awards competition. The winners in five categories are: Best Buy for Best National Retailer; Tweeter , Best A/V Specialty Dealer; Abt Electronics, Best CE Appliance Dealer; Crutchfield, Best Consumer Direct Dealer and Dell, Best Vendor Retailer.

Back To School: Radio Shack is offering free online how-to courses on a variety of consumer electronics products and their use. The class topics include: choosing the right computer, buying and setting up and HDTV; techniques in digital photography;and a primer on satellite radio and more. The program is part of a renewed marketing effort by the troubled chain, which is also sponsoring the Rolling Stones’ Bigger Bang tour this year.

November (Pick up images of theWii/PS3 store lines and from the front page of the 11/20 issue; Fabio, Nov. 6 cover)

PS3, Wii Incite Buying Frenzy: Sony and Nintendo kicked the pre-holiday selling season into high gear with limited release launches of their latest video game consoles in the U.S. In some cases, customers lined up outside retail locations days in advance for the chance to get their hands on Sony’s PlayStation3 (PS3) or Nintendo’s Wii, which launched on Nov. 17 and Nov. 19, respectively.

It’s Geek To Me: Geek Squad City, Best Buy’s new national IT repair center, officially opens for business. The 165,000-square-foot-facility began repair operations in July, but officially opened its doors to the public this month. The center came about as Geek Squad increased its efforts to provide operations and services on a national scale in order to compete with other CE dealers.

Sixth Avenue Comes Home: Sixth Avenue Electronics, the New-Jersey-based A/V specialty retailer, has opened its doors for the first time on Long Island. Its approximately 25,000-square-foot store marks the retailer’s re-entry into New York State for the chain whose first store was located on Sixth Avenue in Manhattan until 1989. This is the 10th location for the chain.

A Shot Across The Bow: Wal-Mart lets loose with a pre-emptive salvo of CE promotions in order to take the low ground this holiday season. Most noticeably, it slashes the retail on Panasonic’s TH-42PX6U plasma display from a minimum advertised price of $1,800 to just under $1,300, setting the stage for a messy Black Friday.

December (use Target pic from 12/04, p.16)

Black Friday Bottoms Out: Black Friday pricing hit new lows this year with no category more competitive than consumer electronics. Perhaps the most surprising cut was in the flat panel TV realm where a Panasonic 42W-inch plasma HDTV hit a low of $1,000 in the post-Turkey Day fray. Many blamed retail behemoth Wal-Mart for the pricing mayhem, as it was the first to break the minimum advertised price on the Panasonic product a few weeks prior.Regardless, the crowds responded, giving retailers high hopes for a solid holiday season.

Service With A Smile: AVB/Brand Source, the $10 billion home furnishings buying group, creates Brand Source Service, a new division to support its servicing dealers and provide manufacturers with an alternative to existing service organizations. The new division will be made up of AVB members that already perform their own majap and CE repairs.

New Tweeter Stores Are Sweeter: Tweeter Home Entertainment Group opens two more of its “consumer electronics playground” concept stores in Houston and Wilmington, Del., bringing the company’s total to five. President/CEO Joe McGuire says the playground stores have outperformed the chain’s legacy locations in margin, sales and in-home installations, and he plans to steadily roll out the new design nationwide.n