NEW YORK —
Customers came back from their Black Friday hiatus en mass in the days before and after Christmas.
The last-minute surge, aided by an extra Saturday before Christmas, topped off an otherwise disappointing holiday season for CE dealers that was marked by steep promotions, flat to lower revenue, and battered gross margins.
Business was impacted by soft demand for TV, which was compounded by spot shortages that spanned all brands, display types and screen sizes, merchants said. Dealers compensated to some extent by stepping customers up to larger and better-featured models, attaching more profitable categories like audio and home-theater furniture, and offering more non- CE products.
“We had an uptick in last-minute shoppers in the store and saw a major surge online,” reported Abt Electronics president Jon Abt on the eve of Christmas Eve. The company’s web sales, which were up about 25 percent for the season, remained strong through the Christmas cutoff thanks to offers of free shipping and expedited delivery, he said.
Doug Schatz, CE merchandising VP for the 3,000-dealer Nationwide Marketing Group, said members similarly saw an “unexpectedly strong charge” the week before Christmas. “A lot of customers waited to make sure they’re getting the best deals the marketplace has to offer, and the members are very, very pleased.”
Schatz said store visits were also driven by an increase in the number of web-enabled dealers, many of whom enjoyed incremental showroom traffic as a result of their new online presence.
But Bill Trawick, president and executive director of the NATM Buying Corp., the 11-member buying group for independent big-box retailers, doubted that the pre- and post-Christmas surge made up for seasonlong weakness in TV.
“I would be shocked if the December numbers are big,” he said late last month. “Everyone waited for Black Friday, and then the door closed.”
To some extent, NATM dealers made up for soft TV unit and dollar volume with sales of major appliances, which they promoted aggressively. “December was a big appliance month,” Trawick said. “The category’s not exactly flourishing, but it’s showing positive comps.”
Dave Workman, executive director and COO of the Progressive Retailers Organization (PRO Group), said his buying group’s 16 specialty A/V dealers experienced similar softness in video. “It would have been an incredible season except for TV,” he told TWICE, paraphrasing a member dealer. But the group, which elected to stay out of the Black Friday fray, enjoyed solid increases in audio, led by a surge in headphone sales, and its bricks-and-clicks members benefitted from the migration to online shopping.
Apple products also performed well for authorized PRO dealers, Workman said, and generated “phenomenal traffic” for NATM’s trio of authorized sellers, Abt, Nebraska Furniture Mart and P.C. Richard & Son, added Trawick.
Jon Abt said new non-CE categories like sunglasses, wristwatches, luggage, fitness equipment and home comfort helped compensate for margin declines in TV and video gaming, while services like free tech support, and a new test of 24-hour live support, helped differentiate the company online.
All told, holiday business was up 10 percent Abt noted, driven in large measure by headphones (“Amazing,” he said), iPads, e-readers, ultrabooks and streaming media devices.
Meanwhile, Nationwide dealers bucked the TV trend by focusing on feature-rich models and extra-large screen sizes. “The 55-inch to 80-inch displays were very strong performers for us,” Schatz observed, while “smart TV was the big feature winner. Awareness of its benefits was much higher, and it really came into its own.”
Nationwide also did well with better soundbars, sales of which were incremental to, and more profitable than, its HTiB and component audio business, and dealers sold a fair amount of A/V furniture, which customers needed to accommodate the larger screen sizes.
Schatz added that the strong Christmas finish and demand for larger, more feature-laden TVs bodes well for Super Bowl, which is the “sweet spot for our value-added dealers.”