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Retailers Predict Key Growth Areas For 2008

With many of the industry’s top product segments now reaching maturity, retailers will have to look beyond MP3 players, DVD decks and digital cameras to drive incremental growth. As Progressive Retailers Organization (PRO) Group executive director Dave Workman told TWICE, there may be no home runs on the horizon a la flat-panel TV, but there are certainly a bunch of base hits to be had. Here’s a look at where merchants are placing their open-to-buy bets this year:

Mobility: Mobile devices are expanding to offer new form factors and media-based capabilities, from tablet-like “ultra mobile” PCs to all-in-one smartphones and GPS units with more versatile, computer-like functionality. “Manufacturers are outdoing themselves in a race to bring more range and utility to mobile devices,” said Dan Schwab, marketing VP at D&H Distributing, making the category a catalyst that will continue to influence the market in 2008. “The trend also benefits the supply channel,” he said, since “the variety of devices and functions that the dealer or installer can offer is always improving.”

Also boosting the handset side of the category will be Verizon Wireless’s decision to open up its network in the back half of the year to compatible devices not distributed by the company, and the advent of Android, Google’s standardized open-source phone platform. These developments, said Tom Galanis, operations VP at Sixth Avenue Electronics, will herald “a revitalization of the cellphone business” as handsets become a hardware category just like any other. Carrier-agnostic phones will also be a blessing to retail inventories, since dealers will no longer have to carry a separate selection of SKUs for each wireless provider.

GPS: Though a subset of mobility, portable navigation’s breakout success during the 2007 holiday selling season earns it its own place in the merchandise mix. “It’s going to be very, very strong this year,” Galanis said, thanks to enhanced feature set and lower price points. Latest-generation personal navigation devices offer MP3 playback, photo viewing, streaming video, voice command and Bluetooth capability, he said, making it a hands-free device for wireless handsets.

Another factor feeding the GPS frenzy is the soft economy and high fuel prices. “As people become more cost conscious, they’re looking at navigation as good way to save on gasoline by plotting out the most efficient routes,” Galanis said.

TV: Despite flat-panel saturation, TV will remain a core category this year, although several marketplace trends will alter the kind of sets that are sold. Galanis anticipates that rear-projection microdisplay TVs will continue to cede share and will be mainly relegated to mass-market chains in 65-inch and larger sizes. Meanwhile, 1080p will come to the fore as the mainstay resolution for most HDTVs, minimizing but not yet eliminating 720p’s marketplace presence.

On the brand front, the diminishing price delta between tier 1 and secondary and tertiary brands will give top-shelf TVs a competitive advantage in the marketplace, Galanis said, as name-brand sets become more affordable.

Gaming: D&H’s Schwab foresees another solid year for gaming, a category that grew nearly 60 percent for the distributor in 2007, and is certain to gain further momentum from the expanding mobility sector.