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Heavy Discounting, Slim Margins Expected


What type of fourth quarter do you
think the industry will have this year?

Warren Chaiken, Almo:

Consumer confidence
is at an all-time low, so it will take some
heavy discounting to get consumers to open
their wallets. At the end of the quarter I think
we’ll see that top-of-the-line sales will be comparable
to or ahead of last year. The diligent retailers
that concentrated on filling the basket vs.
one-off promotions will experience comfortable
margin gains.

Doretta Raffio, ADI:

It may be an overused
phrase, but “cautiously optimistic” sums up our
expectations. We are all hoping for a sales uplift
in areas outside of flat panels and tablets, but
expect sales in these product areas to lead the
way. 3D technology is still in the early adapter
phase. There are a lot of questions being asked
of installers — very similar to where the HD industry
was a few years ago. Homeowners recognize
that to experience 3D, you need the content
as well as the accessories.

Doug Robison, DSI Systems:

Sales volume
should be robust, but margins will be tight.

Fred Towns, New Age Electronics:

the conversations we have had with our retailers,
they expect more than likely single-digit growth
mainly due to the deep discounting they will have
to offer in order to get consumers to come to their
stores to buy. They will have to sacrifice margins
in order to drive business, but can balance that
out by adding bundle options and increasing attach
rates for other high-margin items.

Mark Gustavson, WYNIT:

As a rule, most
manufacturers have “right-sized” their capacities
and retailers have paid significant attention to initial
stocking orders leading up to the holidays.

We therefore look forward to a strong finish
to 2010, with one major variable to consider
— what will impact the U.S. consumer’s willingness
to spend? The outcome of the midterm
elections, coupled with one’s personal economic
reality, will inevitably make some consumers
more comfortable, and others less.

The success of the season will be driven by
how products and prices align with discretionary
spending power.

Rob Eby, D&H Distributing:

I think vendors are hoping
for the best this season, and they’re taking action to make
that the case as we emerge from the recession. We all have
to measure up against Window 7 sales from last year, so the
industry is annualizing bigger sales growth because of it.

In light of this, manufacturers are trying to hit the right
price points in order to generate the numbers they want this
year. They’re doing things like adding incentives such as
free 3D glasses with a new 3D-capable DVD player to get
consumers buying. Manufacturers and retailers want to
make sure that fourth quarter is successful, and are willing
to offer their best deals in order to make that happen.

Bill Stewart, Petra Industries:

We’re cautiously optimistic
about the fourth quarter. We expect to see things
stabilize further and even predict growth in some categories
like A/V mounts, cables, gaming, headphones and
Apple accessories, particularly iPhone 4 and iPad cases,
as those will still be hot gift items for the holidays. Blu-ray
should also do well with movies getting bundled with players,
particularly around Black Friday. Our merchandising
team continues to do a great job negotiating deals and
bringing in inventory for fourth quarter that will support numerous
promotions we will extend to our dealers.