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Audio Yay, Wearables Nay As CE Holiday Hits

TWICE: There’s obviously been a lot of buzz around wearables. Will Santa’s sleigh be weighed down by smart watches?

Dave Workman, ProSource: You can’t think about it as just the smart watch. Wearables in general, with health and fitness apps, are the key. Samsung and the other giants will make their presence known in the category.

It will be a growth category but I’m not sure if it will be the be-all and end-all. I don’t think this is a breakout category. As a matter of fact, I don’t think there are any “must have” items in the category out there. There doesn’t seem to be a tablet, first-generation smartphone or GPS-type hit that will be a “must have” for this holiday season.

Dan Pidgeon, Starpower: Wearables are not a revenue opportunity for us. They’re more than just function, they’re a fashion statement with various form factors, and we can’t carry the full gamut.

It will be tough for brick-and-mortar retailers to out-merchandise online retailers in this category.

Rick Souder, Crutchfield: We have a limited position in wearables at this point.

Tom Hickman, Nationwide: We have spent time with large manufacturers and they have discussed wearables about as much as 4K. They want to get into the business and get their fair share, and they will force promotional activity.

The bulk of our brick-and-mortar Main Street guys will be in it since it will be a huge opportunity for us. These products can be complicated, but our guys are positioned to sell them with a directed sales force.

Mike Abt, Abt Electronics: Wearables are selling well for us, but they’re a low dollar-volume product. Headphones are wearables too, and their sales have surpassed loudspeakers.

Souder: Five years ago headphones was merely a large category, but it has shown phenomenal growth and now it’s a giant category that’s still growing, only more slowly.

TWICE: How do you think Apple’s Beats acquisition will affect the category?

Workman: No short-term changes will occur, but there is concern because Apple never builds margin for dealers; it usually moves to move as much margin to itself as possible. The Apple-Beats deal is far more than just about headphones, which will pay the rent for a while. It is about other things in the Apple ecosystem.

TWICE: What other opportunities are there for holiday?

Hickman: We do have some members that do video games. For us it is a generational thing, much like wearables. Xbox One and PS4 are opportunities to sell the generation that played on the earlier versions. We need to embrace that generation as it moves into the next stage of life.

Abt: Wireless speakers will be big.

Souder: They haven’t crested yet. Their numbers are showing strong growth and there are still a lot of people who either are unware of them or know what they are but haven’t experienced them yet.

TWICE: What about wireless multiroom audio? Will that go mainstream in the second half?

Workman: The second half might be a little early for mainstream. Hopefully by 2015 it will be. [The Consumer Electronics Association] is working on standards now, and when they are set you can then get music services to opt into it. And when storage and other issues are set, I think it can become what audio is today.

TWICE: Same for high-resolution audio?

Workman: Some say high res audio is still a little complicated, but that too will change once the storage issues and standards are set and it can deliver a higher-quality streaming source. Then it will have a big place in audio in general. For our dealers we will sell it now, and we have been, but it is a niche. When you merge streaming multi-room capabilities with hi res that’s when the market will broaden.

TWICE: What non-electronics categories should also be considered for the fourth quarter?

Pidgeon: Appliances are growing extremely well; we’ve doubled our business since we entered the category. I’d love to see more smart appliances, but as new home automation products come to market we will see more collateral applications for white goods.

Abt: Appliances are working really well. They’re still getting more exciting, which is great, and depending on which market we’re selling some smart models. They’re not a holiday item, although ovens do really well around Thanksgiving. Then for Christmas, appliances slow and CE sales increase.

Luxury items like jewelry also do well for us in the fourth quarter. Watches sell great, and we also do a nice business in fitness machines.