Your browser is out-of-date!

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

×

TWICE Retail Panel Has Mixed Outlook For Balance Of 2009

A lot has transpired since TWICE’s 2009 Retail Roundtable convened at International CES in January, and much of it was not good.

The industry panel, culled from the dealer, distributor, buying group and analyst communities, foresaw continued consolidation and its effects, and a worried consumer that is pulling back on big-ticket purchases and seeking value in the marketplace.

This month TWICE reunited the panelists in a virtual roundtable to update their observations and refine their forecasts for the remainder of 2009 and beyond. While the environment remains challenging, the participants took solace in easy year-over-year comparisons for the coming months, improved vendor support for the independent channel, and the advent of LED TV, which may help drive traffic back into stores.

The Roundtable discussion follows:

TWICE:Are you anticipating a meaningful uptick in business for the back-to-school and football seasons?

Dave Workman, executive director/COO, Progressive Retailers Organization (PRO Group): Based on the softer comparisons from mid-September through December, we should see better performance in the second half.

The wild card in all of this will be the jobless rate and the sentiment that accompanies the consumer’s view of the economy. If the numbers do not stabilize, we will see better overall performance but a continued shift downward in what the customer is actually buying.

Tom Galanis, operations VP, Sixth Avenue Electronics: I hate to be the bear in the market, but there’ll be no meaningful gain in business, only flat to slightly up.

Rick Souder, merchandising executive VP, Crutchfield: I also don’t believe there will be significant increases in the business for at least the rest of the year. While things have stabilized, I do not see significant changes to the economic headwinds or the resulting consumer sentiment.

Consequently, I believe actual monthly dollar sales will stay similar to the last several months with a normal seasonal pattern during the holidays. If that is true, the industry may see better percentage results versus last year since the comparisons get much easier.

Even if volume picks up, I think the mass customer will still focus on value and lower-priced products or categories. That will present profit challenges for many. Those that have addressed their balance sheet and expenses will do OK. Those that haven’t may join the increasing ranks of closed businesses.

Jeannette Howe, executive director, Specialty Electronics Nationwide (SEN)/Nationwide Marketing Group: It saddens me deeply that a number of good friends have gone out of business over the last six months. The real tragedy, however, was they didn’t tell anyone that they were in trouble until it was far too late to save their companies. As a community, we need each other to weather this storm. At Specialty Electronics Nationwide, we have consultants and staff members available to counsel dealers during these challenging times. The manufacturing community will help as well. The worst strategy for a struggling dealer is to withdraw and go dark.

That said, I doubt there will be a meaningful uptick for back-to-school. Although business may be slowly improving, price points are such that dealers have to sell a whole lot more products to make up for the volume they did last year. I was talking to a dealer member a few days ago who was complaining that by the fourth quarter TVs will have dropped $500 each in average selling price compared to last year. My question was, how many profit dollars does that $500 price drop cost you? Fifty dollars? One hundred dollars?

For the next year, or maybe longer, dealers really need to think in terms of profit dollars and not gross sales. For most dealers, the only way they will survive and thrive is to plan to be down but still be profitable. For example, I encourage dealer members to support Control4. Given the economy, dealers generally aren’t going to get big dollars for wildly exotic automation systems and expensive programming hours. The correct market response for many dealers is to bring in a lower-cost solution that is still cutting edge and exciting, but also very profitable.

I am much more optimistic about Q4 and early 2010 and hopeful that today, the worst of the economic downturn is over. The rebuilding process will be slow and we all have to be sharper business people.

Dan Schwab, co-president, D&H Distributing: Our overall business has been very strong lately. We expect football to provide some lift due to the developments in LED television. They’re bigger, thinner, brighter and more energy-efficient than ever. Some models can claim up to 40 percent less consumption than before, with units down to 1.2 inches in thickness. They’ve got a huge “wow” factor. This, combined with decreasing price points in the flat panel category in general, makes for higher demand.

We think back-to-school will be driven primarily by strong sales of mobile devices, from thin, light notebooks and netbooks to smartphones.

Steve Caldero, senior VP/COO, Ken Crane’s: Back-to-school does not really affect our business, although football season should provide a lift, as there is nothing more exciting than college football in high definition.

Oh yeah, there are those NFL games too!

Noah Herschman, home and mobile electronics director, Amazon.com: We can’t speculate on what our sales will be. However, for our second-quarter results we were pleased to announce that North America electronics and general merchandise revenue grew 29 percent year over year to $1.19 billion, representing 48 percent of North America revenues, up from 42 percent.

More and more, Amazon customers are choosing to buy electronics and like merchandise online because we’re staying heads-down focused on providing customers low prices, vast selection and fast delivery. Our customers saved more than $900 million with our free shipping offers, including Amazon Prime, over the last year, and Kindle sales continue to exceed our expectations.

In terms of football season, Amazon TVs are easier to get delivered than ever. Our scheduled delivery service allows customers to choose their delivery date through a pop-up calendar. Our customers can choose from a two- to a four-hour window, depending on the region, and the carrier will deliver their TV with no additional contact necessary.

For HDTVs 40 inches or larger, we offer free enhanced delivery where a representative of the carrier will bring the TV to any room suitable for testing, unpack it, and ensure that it is working properly to guarantee no damage occurred during transportation.

Featured

Close