Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now


Merchants Are Forecasting Christmas Chill From Consumers


CE and appliance merchants are forecasting
a cold shoulder from consumers this holiday

Retail executives believe the industry’s current
doldrums, which exceed even last summer’s unprecedented
slowdown, could continue into the all-important
holiday selling period, triggering drastic price promotions.

Compounding the problem, they say, is a dearth of
new high-tech lures as shoppers gravitate to low-margin
tablets and smartphones and remain largely indifferent
to 3D and connected TV.

“My best guess is that where we are today will carry
through to the fourth quarter, and right now we’re in a
very tough market,” observed Bill Trawick, president
and executive director
of the NATM Buying
Corp., whose members
include the country’s largest big-box regional

For some NATM dealers, business conditions
are more challenging now than in
the past three years. “They thought they
had hit bottom, but it’s even tougher now,”
he said, although there are also signs of
resurgence in some markets where the
recession started earlier.

Whether the industry can shake off its
malaise before Christmas depends on many variables,
including resolving the debt-ceiling issue, Trawick
said. But even a brighter economic outlook won’t bring
new technologies to the fore by the fourth quarter. As
it stands, mobile devices including smartphones and
tablets , and all things Apple, will
continue to generate
traffic and sales for the
holidays, he predicted.
TV, however, has been
relegated once again to
a replacement business,
with a possible “bump”
in 3D and smart models
as prices continue to decline.

Like Trawick, D&H Distributing
senior sales VP Jeff Davis said the fate of
the fourth quarter rests with macroeconomic forces.
“We’re optimistic, but also hoping for
better economic conditions and improved
employment to help the shopping
season. If the housing market continues
to improve, unemployment goes down,
and innovative products continue to infuse
the marketplace, then the consumer
will come out to make purchases.”

Topping holiday shopping lists will be tablet computers,
which “most sources agree will be the hottest
category,” Davis said. D&H also has high expectations
for thin and light notebooks, all-in-one desktops, LED
monitors and storage, and anticipates “more demand
for smart LED TV with built-in apps, social networking,
and downloadable content and searching.”

In contrast, demand for 3DTV remains tepid, he
said. “There is some momentum but it has yet to gain

Adding to TV’s woes is a shortage of 50-inch and
larger panels, reported Bob Lawrence, CEO of the
BrandSource buying group. “Big screens are moving
when we can get a steady supply, but we’re having
trouble getting inventory,” he said. Lawrence believes
vendors are ratcheting back production and diverting available inventory to other, more profitable
markets overseas.

Supply issues aside, consumer sentiment
remains low and Lawrence doesn’t
foresee any significant pickup until the
housing and unemployment numbers
improve. As a result, “Business right
now is tougher than I’ve ever seen it in
my career — and I’ve been in the industry
since 1978,” he said. “But those members
that are promoting are getting their
fair share.”

Rick Bellows, president of the MEGA
Group USA buying organization, agreed
that promotions are critical for driving
business, both now and during the holidays.

“Everybody has cut back on their
forecasts,” he said, with MEGA’s own
holiday projections in the range of flat to
negative 2 percent, which still exceeds
industry averages. “But those who stay
aggressive and continue
to market are getting whatever
business is out there
to get. When you put deals
out there the consumer will
step up.”

Dealers will get plenty
of assistance from panicky
manufacturers in crafting
holiday promotions, although this year
vendors will attempt to rein back the
Black Friday period from three to four
weeks to three to four days. “They don’t
want to get caught in another monthlong
window,” Bellows

But not all share in the
downbeat outlook. Paul
Ryder, CE VP at

, believes “customer
interest and demand will
continue to be strong
through the balance of the
year” (see TWICE, July 5), while
Walmart home entertainment senior VP
Gary Severson predicted that the second
half, though competitive, “will get a
little better.” [See TWICE, June 6.]

Staples’ retail president Demos
Parneros is similarly up on CE in general,
and tablets in particular. The No.
1 office-supply chain expects to have
eight to 10 tablet and e-reader models
in stores by Christmas, he told analysts
last month, including devices from
Hewlett-Packard and HTC that will join
Staples’ current assortment of Kindles,
Nooks and Motorola Xooms.

Customer reaction and adoption has
been good, he noted. “It’s a really good
business right now,” he said of e-books,
while tablets “work well” and are generating
“a lot of demand.”

Parneros said Staples will also “double
down” on Monster’s Beats line of
premium headphones following a successful
2010 holiday launch.

Also optimistic about Q4 is Jeannette
Howe, executive director of Specialty
Electronics Nationwide (SEN), the
A/V, integration and custom installation
division of the Nationwide Marketing
Group. “Americans love Christmas and
we’ve always had one, even in the recession,”
she said.

While business remains inconsistent,
Howe anticipates 3 percent growth
for SEN members this holiday season
on top of last year’s comparable gains,
based on growing demand for larger
screen TVs and a resurgence of audio
separates. “If those trends continue it will
be a pretty good year for us,” she said.

Howe believes that the current slowgrowth
environment is the new norm for
the industry, and that dealers who cut
costs and run lean can continue to glean
incremental sales. She is also enthusiastic
about the introduction of smart
appliances in 2012, which will boost
sales for majap dealers and system integrators,
and make the kitchen the new
center of technology in the home.

Richard Glikes, executive director of
Home Technology Specialists of America
(HTSA), the custom installation, system
integration and A/V specialty buying
group, also believes that Santa will
smile upon the industry come Christmas.
“The holidays will be good and will
start sooner,” he predicted. “Americans
love to spend money, and there’s a lot of
pent-up demand.”

Glikes said naysayers have short memories,
and that all summers are very slow.
“It doesn’t get started until football season,
assuming we have one this year.”
But regardless of whether NFL owners and players can reach an accord, consumer
confidence levels and attitudes
will improve and traffic will return following
the summertime distractions of vacations
and barbeques, he said.

HTSA members are additionally sheltered
by an upscale clientele that “isn’t
concerned by housing values or the
price of fuel,” he said. “They tend to
pamper themselves more in hard times
… we can use more of them.”

Glikes agreed that
“there’s not a lot of new,
exciting stuff” to drive the
holiday season, but believes
select categories
will be hot, including tablets
for whole-home control;
distributed sound and
look-alike Sonos products;
and the full spectrum of audio, including
headphones, loudspeakers and even
turntables, whose growth he described
as “astounding.

“There’s a new fever around music,
and audio is very promising,”
he said.

Short of that, manufacturers
will also “push
harder” on Black Friday by
working on container deals
that will deliver 42-inch
TVs for $399. “Fuzzy TV at
a cheap price will be there,
and it will drive traffic,” Glikes said.