NEW YORK – The lingering aftermath of the Great Recession, and a restructuring of the CE business and of retail itself, continued to keep a lid on industry sell-through last year.
Total sales for the 100 largest CE retailers were essentially flat in 2014, edging down 0.4 percent to $130.9 billion, according to the annual TWICE Top 100 Retailers Report.
The tally, produced for TWICE by market research partner The Stevenson Company/TraQline, marks the third consecutive year of static sales for the industry’s largest dealers.[An expanded PDF version of the report featuring additional breakout charts and management contact information is available for purchase here.]
But the results may mask even greater instability across the CE retail landscape. According to Stevenson research VP Bob Tancula, the Top 100 total was largely buoyed by double-digit growth at third-ranked Amazon.com, which continues to suck up share, and by showroom retailers like Conn’s (No. 28) and Simply Mac (No. 43), which goosed their sales growth by aggressively opening new stores.
Overall, Tancula said, total sales for all electronics retailers likely fell about 4 percent last year, as dealers increasingly cut back their CE floor space in favor of higher- margin merchandise like mattresses and furniture.
Indeed, even mighty Apple Stores, No. 4 on our retail hit parade, experienced what for that business must have been a disappointing year, as softening demand for iPads and computers led to a relatively modest 4.4 percent gain in 2014.
Elsewhere in the Top Five, industry leader Best Buy, whose Renew Blue turnaround is still a work in progress, managed to stabilize sales last year with a limited 1.3 percent decline, while No. 2 CE retailer Walmart, with a 3.1 percent dip, continues its uphill climb amid a struggling customer base.
Further down the rankings, RadioShack (No. 10) put in a surprisingly less-than-horrible performance in its final year as a public company, as a pre-bankruptcy burst of online activity helped limit its fall to 17 percent.
Systemax (No. 21) also suffered a stiff but seemingly benign 13 percent decline in the final year before it essentially pulled the plug on its TigerDirect retail chain.
Conversely, Sony Stores (No. 46) fell hard in 2014, with sales dropping 77 percent amid the wholesale shutdown of the manufacturer’s retail operations.
The second-steepest decline, 69 percent, was posted by Barnes & Noble (No. 53), whose one-trick claim to CE fame Nook continues to crumble amid the tablet market meltdown.
Lesser double-digit declines were evinced by Staples (No. 15) and Office Depot (No. 14), begging the question of what can be gained through their merger, while hhgregg (No. 17) continued to falter as it reevaluates its merchandise mix and go-to-market strategy.
But not all was gloomy. The aforementioned Simply Mac enjoyed the grandest gains, up 85 percent last year as parent company GameStop (No. 7) grew the store count nearly eight fold, pushing the Apple specialty chain into the Top 50. For GameStop itself sales growth came in at under 1 percent, underscoring the diversification strategy that led to its acquisition of Simply Mac and the Spring Mobile and Cricket Wireless cellular chains.
Also enjoying double-digit growth was airport chain InMotion Entertainment (No. 58), which fueled a 25 percent gain with the addition of 10 new stores, and independent Philadelphia-area dealer World Wide Stereo (No. 81), which is reaping the benefits of a remodeled flagship and other infrastructure investments.
A powerful performance was also turned in by Groupon (No. 34), which makes its Top 100 debut by way of Groupon Goods. Unlike its deal-of-the-day sister business, Groupon Goods carries inventory and acts as the reseller of record for all sales – which last year grew a whopping 39 percent.
But these were the exceptions rather than the rule, as most Top 100 contenders experienced flat or declining sales.
Examined by channel of distribution, CE and appliance stores, led by the likes of Best Buy and 16th place Fry’s, continue to dominate the landscape with a 26.3 percent share of the Top 100 universe, followed by mass merchants like Walmart, Target (No. 5) and Sears (No. 13) at 23.4 percent.
But both channels – and indeed all channels – ceded share to the direct sellers, led by Amazon and Newegg.com (No. 8), and PC manufacturers Dell (No. 11), HP (No. 19) and new addition Lenovo (No. 32). Together they took third place with a 21.5 percent share of the Top 100, an increase of 8.6 percent.
Not surprisingly, the big got bigger and the smaller … didn’t. The 10 largest retailers accounted for nearly 80 percent of total Top 100 sell-through, up from 78.6 percent in 2013, while each successive tier of retailers continued to shed sales volume.
Gone from the rankings but not forgotten are OfficeMax, which has largely completed its integration with Office Depot, and industry icons American TV and J&R Music World, which both ceased operations last year.
The TWICE Top 100 CE Retailers Report ranks the leading domestic CE dealers by sales of consumer electronics.
Sales figures are based on information that was supplied by retailers responding to a 300-dealer survey by TWICE and research partner The Stevenson Company. Absent retailers’ input, estimates were developed from Stevenson’s internal market tracking surveys (TraQline), industry sizing based on wholesale shipment figures from the Consumer Electronics Association (CEA) and other sources, and average retail price points by product.
All estimates were further refined through the use of public filings with the Securities and Exchange Commission (SEC), TWICE industry analyses, retail analysts’ financial reports, published data and other external sources.
Once the estimate was determined to be a reasonable assumption of the retailer’s CE sales, the figure was broken out by product category based on the TraQline surveys.
Sales figures by total and by category for 2014 were then compared to 2013 sales tallies, and adjusted if necessary to more closely track total reported revenue growth.
Businesses must meet the following criteria to be considered consumer electronics retailers and to qualify for inclusion in the Top 100 report:
• sells new products directly to consumers;
• has physical retail store locations, or has a significant online presence;
• sells consumer electronic products as one of its principal lines of business;
• does not offer consumer electronics products primarily to sell its transmission services, i.e. wireless carriers, cable operators, satellite radio/TV providers; and
• sells merchandise that is considered consumer electronics products as defined by the CEA (see product definitions at right).
Sales are considered to be the revenue received for the products sold primarily to consumers, including CE hardware and accessories; personal computers, peripherals and software; and video game platforms and software.
Sales of prerecorded music CDs and movie DVDs and Blu-ray discs are excluded from the report.
Respondents were also instructed to exclude revenues received for installation services, repair services, rentals, extended-service contractas and vendor marketing support, as well as sales to the business, government and education channels.
Based on The Stevenson Company’s proprietary methodology, a refined baseline was developed for this annual project effective with the 2005 Top 100 CE Retailers Report, our first collaboration, covering the years 2003 and 2004. Therefore, comparisons with Top 100 reports issued prior to 2005 would be imprecise.
The Stevenson Company, based in Louisville, Ky., began as the global economic analysis and research department of GE Appliances. Now independent, the market research firm has served the consumer electronics and major appliances industries for the past 20 years by developing markets sizing and market share estimates.
Its TraQline syndicated quarterly survey of 150,000 shoppers measures retail purchases of consumer durables and provides estimates of unit and dollar market share and other key measures.
What Is a CE Product?
As defined by the Consumer Electronics Association, here is a breakdown of what constitutes a consumer electronics product and what was included in the Top 100’s sales totals:
Accessories: batteries, cables, headphones, screen cleaners, wearables
Audio products: wired and wireless speakers and soundbars, receivers, CD players (home and portable), home theater in a box, pocket and portable radios, boomboxes, MP3 players, docking stations, distributed audio products, mini stereos, clock radios, headphones, blank recordable audio media
Car electronics: Speakers, in-dash radio/audio/video receivers, amps, satellite radios, radar detectors, alarms, GPS, mobile TVs, video monitors, backup/night vision camera kits, DVD/Blu-Ray Disc players, CB radios
Communications products: corded and cordless phones, answering machines, fax machines, cellphones and smartphones, PDAs, CB radios
Video products: Blu-ray Disc and DVD players (home and portable), cameras, camcorders, DVD recorders, hard-disk recorders, satellite TV dishes and systems, TVs and TV/VCRs/DVD/Blu-ray combos, blank recordable video media, video game consoles, video games, digital media players
Information technology: Cellphones, desktop/ notebook/netbook/tablet PCs, e-readers, external drives, flash media, monitors, networking products, optical drives, printers, software, tablets, accessory hardware (cards, hard drives, keyboards, mice, memory, desktop speakers, etc.), home automation.