What's to come in Y2K?
With stores still counting receipts from what was arguably the best holiday selling season ever, CE retailers are already looking ahead to more of the same in the first months of the new millennium.
Fomenting their cheery forecast is the continuation of the market forces that drove consumers into stores and onto Web sites in record numbers last year: The convergence of a rock-solid economy and a new generation of digital delights.
As Best Buy's senior VP/merchandising Mike London observed, "We think that the continuation of new products and technology-driven consumer solutions will positively drive the business over the next six months."
Number-two CE chain Circuit City agreed, and sees itself as a chief benefactor of market conditions. "It's upturn time for the industry," a spokesman said, "and it's what we've been waiting for. We can benefit disproportionately from the new product cycle because we have a culture of training. Sales training is paramount, especially with the introduction of new digital technology products."
Similarly, Rick Borinstein, VP/merchandise marketing at fourth-ranked RadioShack, is convinced that "unless we're invaded by Martians, 2000 will prove to be a strong year." Fueling his confidence is "a strong, robust economy, a stock market that's hitting new highs, and the fact that everybody's positive. That kind of positive attitude rubs off."
Borinstein added, "Our plan is not flat. Flat would be a crop failure."
Sears' VP/general manager Chuck Cebuhar also takes assurance from the economy's no-end-in-sight strength. "The economy is still good and unemployment is low," he said. "You've got everything working for you, and home entertainment is a natural area to benefit from that, so I think this year's going to be a good continuation of last year."
Bernie Sapienza, VP/merchandising and purchasing for Tweeter Home Entertainment Group, also sees good things in store for this year. "Barring any shakeups in the economy, we will continue to see a very strong climate for consumer electronics," he said.
Driving the continuing sales tsunami are such video darlings as HDTV, DVD and personal video recorders, he said. "We're doing a good-size business in VCR replacement, and we don't see it slowing down. Also, local access will bring an entirely new customer in for DSS, which already has one of the highest attachment rates in the industry."
Sapienza added, "Thanks to new technologies, people need to make upgrades and changes in their lives, and Tweeter is at the front of the curve."
Of course, all of that carries an economic caveat. "Absolutely nothing we sell is anything that anybody needs," Sapienza said. "I mean, how many more TVs does anybody really need, especially if the economy goes bad? But barring that, there's enough new technology out there to continue to fuel the business."
Leading the charge into the 21st century for The Wiz is the newest breed of video devices born of those technologies, said Tasso Koken, executive VP/merchandising and marketing.
"Consumers will have a larger selection of high-definition and plasma TVs to choose from, plus better price points in those areas," Koken said. "HDTV is happening month by month and quarter by quarter. As new programming becomes available this year, and the product offerings grow while the price points get sharper, they'll be more of a presence on retail floors."
The nation's major buying groups are also upbeat about their members' prospects in the new millennium. "We're very optimistic," said Bill Trawick, executive director of NATM. "We were on a roll in 1999, and don't see anything at this point that will turn the numbers around. We're expecting a very positive first half."
Driving that optimism at NATM are "a lot of new and innovative products, especially in appliances," Trawick said, citing contour refrigerator doors and a new generation of washers. "It's been a long time since we've seen any new innovations in appliances." As for the CE side: "The digital wave hasn't come close to reaching its potential."
For Bob Lawrence, executive director of Associated Volume Buyers, even keeping pace with 1999's sales gains would prove a plus. "From the meetings we're having with manufacturers, we're predicting things to be flat from 1999," he said. "But given that 1999 was a record year, if this year is flat, that's fine."
Likewise, Rick Bellows, merchandising director for Best Brands Plus, believes that "This year is going to be a little tougher than last year. You can't hope for the same increases we enjoyed in 1999."
On the high-end A/V front, Ultimate Electronics president David Workman can see "no reason the demand cycle will disappear this month. Our plan is for a continuation of the momentum from last year."
His rationale? "A lot of the products driving the business are just now getting a groundswell beneath them," Workman explained. "And generally speaking, a strong Christmas means a strong first six months."
Cathy Stauffer, merchandising VP for The Good Guys, expects "big things" this year as the West Coast chain continues to pursue a new strategy that emphasizes a mid- to high-end merchandise mix. "It's an exciting time for the industry and our company," she said.
The glad tidings from Christmas '99 will also carry into 2000 for Sound Advice, predicted senior VP of merchandising Michael Blumberg: "We're just at the very, very beginning of the cycle. We have three to five years of growth coming up. Digital products are exploding faster than the compact disc. Just wait until set-top boxes start to get into consumers' homes and their friends come over and see it. Then the real fun begins."
Tom Campbell, a director at Ken Cranes, said his chain "expects to have a very good first quarter and is planning new stores this year." Positive indicators for the upmarket chain include the arrival of third-generation HDTVs, falling prices on flat-panel plasma TVs, and an economy that has held its ground. "Based on what's happening now, it looks very good," he said.
Regional big-box chains are equally bullish about the first half and beyond. "I see the momentum carrying into the first quarter and going right through the rest of the year," said Gary Richard, CEO of P.C. Richard & Son.
Added Leon Temiz, CEO of 6th Avenue Electronics, "Business is booming and we're very excited about the new year. We're planning on double-digit comp-store increases and will open two more stores in New Jersey. All of these merging technologies like DirecTv, TiVo, WebTV, HDTV, DSS and home theater open up larger markets for us."
A more wary Steve Child, VP of R.C. Willey, doesn't see "anything on the immediate horizon that would derail our business. We hope to maintain last year's pace," he said, "and the key for us is store traffic. With so many retailers selling the same merchandise we carry, the emphasis for us is on new products.
"You get them in for a GameBoy and expose them to core products like big-screen TVs and major appliances," he added.
On the appliance side, business will "continue to grow moderately and fairly steadily if the housing market continues to be strong," observed Richard Jones, CEO of Tops Home Appliances. "Our new focus on higher end products is a good area to be in, and we don't see any clouds on the horizon."
Bill Rowland, CEO of American Appliance, is looking to air conditioners to lead the sales charge. "We're going to have a stronger, earlier A/C season than last year," he predicted. "There'll be further price deterioration in the category, but we'll make it up by selling more of them."