Frank Sinatra’s Grammy Award-winning hit “It Was A Very Good Year” clearly wasn’t referencing retail tech sales in 2018.
According to TWICE’s latest Top 100 CE Retailers Report, America’s largest consumer electronics dealers together realized a relatively anemic 0.9 percent increase in revenue last year, compared to the 3.3 percent gains of 2017.
Now that was a very good year. Despite fears of a Trump administration trade war, consumers reveled in 2017’s booming economy, low unemployment rate, sky-high stock market and, at least for some, generous tax cuts. Together they ushered in a retail rebound that gave merchants renewed hope that maybe, just maybe, the industry could return to the glory days of steady foot traffic and high single-digit comps.
But alas that was not to be. Following the initial enthusiasm, consumer spending, at least on techware, began to falter by midyear, and dealers reported a disappointing Holiday 2018 that was preceded by a soft summer.
A chief reason, merchants said, was the absence of a runaway hit product or technology that would capture consumer imagination and bring bodies back into stores. Then there was the old demon of price compression, which once again reared its ugly head and dragged price points on fully featured, 65-inch 4K Ultra HD TVs down to the $500 mark.
One could also argue that smartphones, which were now selling for as much as twice the price of that 65-inch TV, sucked up precious disposable income and continued to pressure the imaging, home audio and personal navigation businesses. Meanwhile, despite all the hoopla surrounding smart products, the dirty little truth is that their low margins and confusing mix of apps and platforms hardly made the connected category a sales savior.
As TWICE research partner Senex learned in culling the 2018 revenue results, CE sales for most retailers was flat to slightly down, and most aren’t expecting a whole lotta improvement this year either.
But not all was doom and gloom. Together the Top 100 retailers, which represent more than 90 percent of the total U.S. CE retail market, moved $140.4 billion in tech merchandise across the counter last year, a new record. Retailers were also finally coming to grips with e-commerce by refining their multichannel operations, and learned to co-exist with Amazon (No. 2 on the TWICE hit parade) by price-matching the e-tail giant and selling through its third-party marketplace.
In addition, some dealers, like Texas-based Conn’s (No.27), flew in the face of the purported “retail apocalypse” by opening new stores to drive revenue.
And despite middling consumer demand for CE, pockets of prosperity existed, particularly in headphones, LED lighting and high-powered gaming computers, while the advent of 5G promises a new wave of replacement sales in the years ahead.
The Top 100 Report’s cumulative 1 percent sales increase also reflects the decline of Sears (No. 17, down from 12th place) and Kmart (No. 45, down from 33rd). CE sales for the sister chains plummeted 34 percent and 55 percent, respectively, as store counts and assortments were slashed. Whether some measure of that lost market share was recovered by competitors is debatable, although standing industry wisdom, based on Circuit City’s swan song, holds that a good portion goes down with the ship.
At the opposite end of the spectrum, Apple (No. 4) sprouted an 11.5 percent sales surge, owing more to price increases than to unit volume gains, while Nashville’s own Electronic Express (No. 43) enjoyed a 23 percent sales spike as it moved beyond A/V to also become Central Tennessee’s source for computers, mobile and security systems.
See also: TWICE Top 100 Methodology