LAS VEGAS – Retailers headed for CES earlier this month were toting itineraries as diverse as the distribution channels they represent.
For some dealers, who had already laid the groundwork for the new year’s programs and plans, the electronics confab represented an opportunity to either tweak or cement their strategies in countless sit-downs with suppliers.
For others, flush with cash but drained of inventory after planning their holiday business to a T, buying sprees were the order of the day in order to bulk up for the coming quarter.
But regardless of their respective agendas, all merchants shared in the desire to scour the show floor in search of the new and novel and to fill holes in their assortments.
On the eve of CES, TWICE spoke with a sampling of leading CE merchants to suss out their plans as they left for Las Vegas. Here’s what they had to say:
Ray Brown, VP/general manager of Sears’ electronics and home office business, said the show provides an excellent opportunity to see a wide selection of cutting-edge products outside the merchant’s mainstream categories. Moreover, it allows him to meet with a greater variety of vendors than his day-to-day business schedule normally permits.
“The show gives me the opportunity to be exposed to product lines beyond just TVs, camcorders and computers,” said the CES veteran, who’s been making the sojourn for the past 10 years. “There are some exciting product developments coming in telecommunications, digital videography and digital cameras that I’m looking forward to seeing.”
Beyond products, the trade show is also very much about relationships. “This will be a fun and relaxed way to assess year 2000 with a broader array of vendors than I’m normally able to meet with on a weekly basis,” added Brown, who oversees the nation’s sixth-largest retail business in consumer electronics.
For Tweeter Home Entertainment Group, CES is all about discerning product direction. “Our agenda for this show is specifically to look at products,” explained Noah Herschman, marketing VP for the 17-state specialty chain. “We had all our vendors in for the last six weeks before the holidays to talk about programs, and we’ve done all the business planning already, so for this show we’re focused on products.
“We want to know who will deliver the highest-quality, cutting-edge digital products. That’s why it’s so important to review everybody’s line.”
Of particular importance to Tweeter is getting a bead on the direction that dueling technologies are taking. “Who’s going to be showing XM, and who’s going to be showing Sirius?” asked Herschman. “How will the storage devices shake out? The future of MP3 lies in capacity issues. Will it be SD? Will it be Memory Stick? And what’s the future of DVD recording? Is it RAM?
“We’ve got to make sure we’re betting on the right horse. We never carried Divx or DCC, and our customers are counting on us to make the right choices again.”
Other areas the Tweeter merchandising team planned to scrutinize included:
- Feature-laden DVD players boasting progressive scan, audio capabilities or greater storage capacity that can bolster category price points.
- Hard drive-based home-networked music and video distribution.
- And plasma-screen TVs.
As important as the products themselves, Herschman noted, are the back-end alliances that support them.
“You have to determine who the vendors’ partners are and who you’re aligning yourself with, whether it’s in software and engineering, or recurring revenue streams,” he explained. “Who’s behind the technology? You’ve got to dig deeper, beyond the product.
“It’s an exciting time to be in this business. It’s like the old Chinese blessing and curse, ‘May you live in exciting times.’ The products are really amazing and exciting.”
Product is also foremost for Ultimate Electronics. While the regional chain isn’t making any “major line changes,” president/chief operating officer Dave Workman and his team were looking forward to “strengthening our merchandising position” at a number of key price points, both at the high and low ends of the digital spectrum.
“We’re looking at areas where we have to be more correct in the market,” he said. “We can’t ignore the under-$200 DVD player. So we want to see how we can stay more competitive at the promotional areas, while also filling out the high end. There’s still a strong appetite out there for new, cool, neat stuff in digital.”
Product categories of particular interest to Ultimate were MP3, plasma TV and HDTV, with the latter representing the holiday season’s biggest sales catalyst. “We’ll be looking at all those areas very hard,” Workman said.
Although the high-end CE specialist began fomenting its merchandising plans in November, CES represented an opportunity to finalize programs while discussing growth and marketing strategies with vendors for the balance of the year. “CES has always been a big program show for us,” Workman stated.
Like Tweeter, New York-area regional force The Wiz was “looking at home networking and all facets of the connections,” said VP/general merchandise manager Michael Wan. Other categories on The Wiz’s shopping list were flat-panel displays, both for CE products and PCs; digital cameras and camcorders; and all manner of DVD, including progressive-scan and DVD audio models.
“We also want to see more recordable DVD,” he said, “but with the competing formats it looks like the VHS/Beta thing all over again.”
Like Tweeter’s Herschman, Wan envisioned CES as a battleground for competing formats: “DataPlay is a factor. You have a choice of quality with DataPlay vs. MP3, which offers one quality. There’s also more data with DataPlay, and discs are what [consumers] like. I don’t see much [growth] in the Memory Stick or SD storage formats.”
By contrast, CES “isn’t really a shopping show” for Sound Advice. According to senior VP of merchandising Michael Blumberg, “Most of our vendors give us a heads up on new product launches prior to the show, and we tend to stay within our vendor mix. Mostly we try to cement our relationships with vendors and our plans for next year.”
Nonetheless, Blumberg noted that the company would be on the lookout for innovation and is always ready to step outside its core vendor network to get it. “We’re always looking for something new,” he said. “We got into the plasma business by going outside our traditional vendors, and so much of what’s going on in the custom install business is also outside of what they do.”
Also armed with varied show strategies were the nation’s retail buying groups.
Associated Volume Buyers, for one, had a three-pronged approach to tackling CES. “We’ve got a couple of things going on,” professed executive director Bob Lawrence. “We’re still looking at new digital products and business opportunities, but we’re also going to make some fairly big announcements at the show” concerning expansions of the group’s divisions.
“We’re making a major play in the custom high-end arena”-via Home Entertainment Sources, a new AVB offshoot-“and we’re trying to finalize our plans,” he said.
Beyond that, CES is very much a “working show” for AVB as “most of our CE programs are not completed until we get here,” Lawrence acknowledged. “We’ve spent a lot of time over the last couple of years to get our guys back into the brown-goods business. Many had left because of shrinking margins, but now they have a reason to return thanks to the new range of digital products.”
To spur the CE side of members’ assortments, AVB is focused on developing easily displayed turnkey kiosks, such as the satellite display that the group debuted at last year’s CES.
“Our guys are limited in space and resources,” said Lawrence, “so we’re trying to help by giving them a comprehensive display that they can slot in. Our goal is to put all of our members in the satellite business and create new profit opportunities for members and manufacturers.”
Meanwhile, the leadership of NATM Buying Corp., planned to be hunkered down in round-the-clock closed-door sessions with members and suppliers.
“We have our core suppliers coming in Friday, six or seven meetings in a row, and then we’re meeting with our members on Saturday,” said Bill Trawick, executive director of the $3 billion buying group. “We have a chance to see everyone there, have all the issues straightened out and get our programs finished so that we can be in shape for our annual March meeting.”
Trawick actually cut back on the number of member meetings scheduled to allow buyers the opportunity to shop the show. “All of our members will be there, I’ve booked 50 rooms, and their merchandising people are coming,” he said. “We don’t have core programs in TV, and we don’t have programs with lines like JVC, Sharp, Zenith or Panasonic. Yet all our members carry those brands.”
Indeed, NATM’s TV commitments don’t amount to much more than 50 percent of total open-to buy dollars for the category, giving members “plenty of room for flexibility,” Trawick said.
Besides buying groups and land-based stores, the dot-com contingent was also expected in full force at show. Among the cyber shops attending were 800-pound gorilla Amazon.com, lord of the online lot.
According to Carl Gish, general manager of Amazon’s consumer electronics store, its CES mission was threefold. First, it planned to tout the success and growth in CE the company enjoyed over the past year. Second, it hoped to discuss how manufacturers can utilize Amazon to reach a targeted audience with their new technologies. The third objective was to create merchandising plans that extend further out than in the past.
“We excel at distribution for new technologies to targeted audiences,” he said. “We can reach the right consumer with the right information.”
On the product front, Amazon planned to prowl for connected devices, digital imaging items, digital audio and the catchall home-networking category. “Those are the products our customers are particularly interested in,” Gish said.
Also hitting the convention floor was wireless and satellite cyberstore Roxy.com. Founder and chairman Keith Clougherty said the company has “identified a couple of categories we see as being big this year, and we’re lining up partnerships. For us, CES is about getting behind those categories in a big way.”
Topping Roxy’s shopping list were handhelds such as phones, PDAs and MP3 players-all bundled with wireless Internet services-as well as the next generation of game consoles (also Internet connected).
As always, Roxy was also on the lookout for what Clougherty called “peripheral products” such as home theater and TiVo that plug into or support satellite and wireless gear.
“The growth of the marketplace is playing into the sweet spot of our company,” he said.
Beside being a pure product play, CES is seen by Roxy as “a business planning session” during which it develops joint marketing programs with the satellite and wireless sector, Clougherty added.
Also set for a shopping spree of sorts was online CE specialist 800.com. According to senior VP Frank Sadowski, “We’ve managed to control our inventory very successfully through 2000 and into the holiday season, so we’re in a very aggressive buying mode. We’re looking to replenish, but we’re also looking for good buys.”
Heading Sadowski’s wish list were digital cameras, digital camcorders, DVD players and audio products. “We had a really healthy uptick in our audio business,” he explained.
Products aside, he said, 800 also uses CES as a forum for “following through on our planning cycle with our suppliers, and for setting the tone for our marketing and purchasing plans for 2001.”