Now that 2016 is finally behind us, we can turn our attention to what comes next for the industry in the brave new post-election world.
Clearly the incoming Trump administration, through its tax, trade, and immigration policies, will have a big-league impact on the import-dependent CE and majap businesses.
As well, cascading tech innovations like connected everything and increasingly intelligent digital assistants are sure to steer the industry in new and hopefully more lucrative directions this year.
To help chart the course for 2017, TWICE asked several leading industry oracles to assess the tea leaves and share their top predictions for the New Year. Here’s what they had to say.
David Workman, president/CEO, ProSource
Moving into 2017 I see further bi-furcation of the market occurring where the “product review” is in many cases replacing the demo for commodity and mid-priced consumer electronics products. This is will only accelerate the shift to online this year as this trend continues.
On the other side, solutions still require the assistance of a dealer, and those whose businesses are oriented as such will continue to prosper, as wholehome solutions continue to grow in popularity and affordability with the consumer.
Along with this trend will also come greater consumer acceptance of the more DIY-oriented solutions; however, there still may be a level of assistance required for consumers to benefit from the products and how they all work together. This is where we see a monthly recurring revenue model coming into the dealer’s business as these sales begin to resemble more of a low front-end ticket, but with a monitoring and service component that keeps the systems operating correctly.
In general I see consumers and specifically millennials demanding more customized solutions for their CE needs which plays directly into all categories of CE. Voice activation will have a breakout year as more companies partner with the available technologies from Amazon, Google and Microsoft.
The industry is once again looking at a year where there will be a few base hits in individual categories, with no overall compelling product or technology driving overall demand forward.
Lastly, with real estate prices appreciating across the country, consumers are investing back into their homes with lifestyle-oriented CE products, which bodes well for business.
I also believe we will continue to see the migration of consumers within the audio category. What began as a “me” experience with headphones is now becoming a “we” experience with multi-room solutions and an increased interest in higher-quality solutions for sound. I am increasingly encouraged with the growth prospects for this part of the business as consumers discover better sound and consume more and more media digitally.
Jeff Knock, chief commercial officer, Nationwide Marketing Group
I would make a few points.
On the economy: Most economic indicators in place for 2017 are positive. The impact of the election on consumer behavior remains to be seen, but the distraction of the election process is behind us. We see moderate economic tailwinds in play for business this year.
The contract boom should continue, but more moderately than in the past few years. This should also remain a moderate tailwind for retail.
On the competitive landscape: We feel positive about picking up share from the continued decline at Sears. Our local targeted strategies, under the Prepare For Share initiative, are working where Sears is closing or declining, and we expect those trends to continue. The positive analytics behind retailers strategically pursuing this share are unbelievably positive. We expect more momentum and adoption this year.
The continued challenge is negative leverage on margins vs. unit growth. The race for share among retailers and vendors created untraditional ASV [average sales value] challenges in 2016 and we expect those to continue, and increase, in 2017.
We also expect the competitive landscape across vendors in the kitchen to intensify this year as product innovation and assortments get larger across the major home appliance players.
On marketing: Multi-media reach will continue to separate winning retailers from others. The ability to specifically market through multi-generations is the simple key to share growth.
It is also critical for independent dealers to employ targeted “brand building” during non-promotional periods, and to keep consumers entering the purchase cycle top of mind.
Lastly, digital — a specific focus with the growth in mobile shopping — will grow at high rates. Retailers must use this platform to create awareness across these groups and create an over-the-top, in-store experience to create customers for a lifetime.
Warren Chaiken, president/CEO, Almo Corp.
Assuming the U.S. economy continues to regain momentum, and overall consumer confidence remains high, we are optimistic about 2017 for all of our business segments.
For major appliances, we expect sales will remain strong, as we are in a replacement cycle generated by the 2004-2006 record-setting sales period. In addition, several manufacturers are planning to introduce innovative products, especially in laundry and refrigeration.
Consumer shopping preference for mass-premium appliances continues to lean toward the independent dealers that can offer more personalized service, delivery and installation.
For consumer electronics, the market has become split between commoditized products and custom home A/V products. We’ll also see sales for the hot mass-market products like Bluetooth audio and headphones, fitness electronics and TVs continue to shift online. But we anticipate home automation and premium 4K TV product sales will continue their upward growth trend, particularly with our independent dealers that focus on service and installation.
Jerry Satoren, executive director, NATM Buying Corp.
My outlook for 2017 is very positive. I believe that economic trends in the U.S. have been and will continue to tread on very solid ground. Though the country has not seen the robust growth everyone’s been hoping for, our economy has fundamental strength, with corporate America in solid shape and unemployment at eight-year lows.
With the uncertainly of an election year behind us and an administration in place that is led by a businessman focused on making American companies stronger and more competitive, I feel that consumers will be even more willing to spend than they were in 2016. That bodes well for retailers!
As it relates to NATM’s two largest retail categories, there are even more positive signs ahead. In the TV space we have a nice confluence of real, discernable performance improvements in picture quality — the biggest since the introduction of HDTV — combined with price points for 2017 that will make these premium TVs affordable to a significantly larger segment of the population.
While 4K will become ubiquitous this year, the step-up models that feature a wider range and depth of colors, along with the benefits of brightness and contrast that HDR brings, makes the difference from what people are watching now (1080p) very obvious to the average consumer and very desirable. So premium TV will continue to strengthen next year, which is great news for us.
In the major appliance business, we are now in the midst of the 10-year replacement cycle for some of the best years the appliance business has seen just prior to the crash of 2008. Combine that with some very cool and innovative connected products planned by many appliance manufacturers for 2017, and this business will no longer solely be about replacements and the home building business. These aspirational products will have consumers buying new appliances because they want to, rather than have to.
Here’s to a great 2017!
Tom Campbell, corporate director, Video & Audio Center, CTA Hall of Famer
We see a bright year ahead for three reasons: Discover, desire and demand — the Three D’s of Marketing — which is something I teach at Georgetown.
You have to know the product exists, and between CES and CTA, look at the message that gets through to the consumer. The tech press too carries the torch of information to the consumer and to the industry.
Once they discover it, you’ve got to create the desire, and we have a lot of new products coming and new categories that we’re carrying. One such category I call cosmetech — cosmetic technology. Facial masks, the new digital hairdryer by Dyson … we’re going to be moving into that category even more with a Video & Audio Center Dyson Digital Technology Showcase store.
And of course 8K is going to be coming, but right now 4K is just huge. Already over 1 million 4K Ultra HD Blu-ray discs have been sold since March, and we’re ordering 4K players by the thousands. The attachment rate is phenomenal.
Soundbars and digital go-anywhere products are also way up. And despite margin erosion and a smaller average ticket due to price compression, the transaction numbers are up and we’ve more than doubled our business so far this year.
Plus there are fewer dealers. Those who remain are out there with a consistent message. We’re on radio, TV and in newspapers 52 weeks a year, so we have the visibility and we have the voice.
So I see a very brisk, very robust 2017, for the independent dealers, for the web operations and the big-box movers. We’re seeing a lot of traffic at Best Buy; I think they’re doing an outstanding job, and they’re embracing more and more categories. You go into a Best Buy store and you see juicers, you see grills, you see hairdryers, you see everything — it has really, really expanded. This is great news for the channel.