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Dealers, Survey Point To Upbeat CD-R Sales

Brick & mortar retailers are more enthusiastic about the fourth-quarter growth prospects of CD re-corders than they are about projected MiniDisc growth, and an NPD Intelect survey of retail sell-through shows why.

Although unit sales of both formats are growing through brick & mortar outlets, in recent months CD recorder sales have begun to close the unit sales gap with portable and home component MD products, the survey found.

In dollars, however, CD-R sales have not only closed the gap but have exceeded MD sales because of higher average tickets (see charts).

For the 12 months ending August, NPD found, the average CD recorder ticket was $542 compared to the average portable MD price of $277, the MD home recorder price of $247, and the MD bundle (a portable, home component and software) price of $311.

The NPD survey tracks sales through brick & mortar retailers that account for about 80% of total U.S. electronics volume. Surveyed dealers exclude online and catalog dealers.

The sales trend is bound to accelerate in the fourth quarter because of a growing CD recorder selection, particularly in high-demand dual-well models.

Kenwood and Onkyo, for example, planned to ship their first dual-well in November, ending Philips’ monopoly on the configuration. A Philips shelf system with CD recorder and three-disc changers was also due at the end of October, to be followed in December with an Aiwa model.

Sony, meanwhile, has scaled back its MD promotion efforts from last year’s record levels.

At least one brick & mortar dealer, Florida’s Sound Advice, projects threefold growth in its fourth-quarter CD-R sales.

“Sales are still exceeding expectations,” said merchandise manager Tim Coakley. “It will be a big fourth-quarter product because last year supplies weren’t real good and it was just catching on.”

About 75% of CD-R sales are in dual-well models, he noted.

On the home component side MD “is still a difficult sale. It hasn’t lived up to expectations,” Coakley said. “Nonetheless, Sony’s new CD/MD dubbing deck, with 4x recording speed, is selling real well” at $400 and is beating expectations.

Sound Advice portable buyer Bob Warren said portable MD sales are “a lot better” than component MD sales. Although portable MD sales are up month to month, “we don’t have high expectations,” he said. During the fourth quarter, the chain will increase its selection to four or five portable SKUs from about two last year.

Ovation’s experience has been about the same. “Last year, we brought in CD-R in the fall and sold more than we thought,” said Gary McCormick, president of the Indianapolis-based chain.

This fall, Ovation has expanded its selection to about five SKUs. “So far, CD-R has been the strongest product. We’ve sold some MiniDisc, but it hasn’t been a runaway success,” he said.

Ovation’s baby-boomer customer base, he said, “is comfortable with the 5-inch format. MiniDisc is a more youthful format.”

PRO’s Roger Heuberger described CD-R as “a very good business for us” and MD as a “good business.” Dual-well CD-recorders account for the majority of CD-R sales, even though they are still in tight supply and are expected to remain so through the end of the year, he said.

“We’re ordering everything we can get in dual-well,” he said. On the other hand, availability of single-well CD-R has been “good” for the past 60 days, he added.

MD sales are growing, Heuberger said, and although the format “is not a huge business, it has a very healthy effect” because it helps boost the average portable audio ticket.

As for MD sales next year, “I don’t know what will happen. It will be a whole new ball game with flash-memory portables.” Still, he said, solid-state portables won’t be as attractive as MD “until you have a removable medium at a reasonable price,” so consumers won’t have to write over their media to listen to new songs.

Besides boosting dealer sales, Heuberger noted, CD-R has accomplished one other goal: it has helped Philips “rebuild its brand.”

Ovation’s McCormick agreed. “We didn’t have Philips audio or video until they came out with CD-R and the Pronto remote,” he said.

One dealer less enthusiastic about CD-R as an audio component is Wade Fenn, Best Buy’s executive VP for marketing. His MD sales are growing, but as for audio CD-recorders, he said, “CD-R is popular, but more as a PC peripheral, and it hasn’t hit the broad market yet.”