Just when they thought things couldn't get any better, they did.
Back in 1998, consumer electronics retailers lauded the explosive combination of a soaring economy and the first wave of digital devices, which together propelled sales of the industry's Top 100 merchants 11.5% to an unheralded high of $64.9 billion.
It was a tough act to follow, and for many, expectations ran no better than a repeat performance.
But the same confluence of low unemployment, oodles of Wall Street wealth, and a bonanza of new -- and newly affordable -- electronic playthings swept CE sales up nearly 15% to $74.5 billion in 1999, leaving the prior-year record in the dust. Simply put, and with apologies to political strategist James Carville, it was the economy and DVDs, stupid, and the prospects for more of the same seem strong.
"Business continues to be very good, and everything is going well," observed Steve Child, VP of 65th-ranked R.C. Willey. "The DVD business is particularly strong and is sucking through a lot of high-margin products. And with the advent of DTV and the kind of penetration we're anticipating, the good times could last quite a few years, as new products accelerate it. For those retailers who are good enough to hang products on DTV, business will be excellent."
Fellow NATM member -- and Berkshire Hathaway investment -- Nebraska Furniture Mart (No. 71) is equally upbeat.
"Business is excellent, and all elements are showing strong results," said principal Louie Blumkin. "Every business has its peaks and valleys, but the way things are going, this should last for awhile. The economy is on a roll right now, there's low unemployment, and there's a lot of spending money out there."
Added NATM president Jerry Throgmartin, who doubles as CEO of 46th-ranked H.H. Gregg, "People are upbeat about business, and the digital revolution will create a lot of opportunities."
That's the same drumbeat Best Buy CEO Richard Schulze has been sounding for the past 18 months. Commenting on the company's 25% sales spike during the make-it-or-break-it months of November through February, he noted, "Consumer demand for digital technology products, which was stimulated by the increased popularity and affordability of DVD players, satellite systems, phones, digital cameras and camcorders, again contributed to higher than expected sales."
Arch rival Richard Sharp, CEO of second-place Circuit City, concurred, noting that in 1999, "We began to see the strength of a digital product cycle that we believe can last well into the new decade. Sales of new video technologies such as DirecTv, DVD and digital camcorders rose rapidly, while wireless communications and higher-end products such as big-screen TVs also were strong sales drivers."
Jeffrey Stone, CEO of 39th-place Tweeter Home Entertainment Group, also forecasts a bright future, thanks to "continuing demand for the products and services that we offer customers in our markets and complemented by a robust U.S. economy."
As Nationwide Television & Appliance executive director Ed Kelly concluded, "The high-end business is exploding because more and more people have money to spend on these things."