What's In Store: As Holiday Season Approaches, Distributors Talk Shop

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With the holiday selling season rapidly approaching, TWICE wanted to find out what types of CE products might be on Santa's list, but unavailable to fill consumers' stockings. Most independent CE retailers depend solely on their distributors to come through with the most-wanted products to fill their shelves, so we called a dozen distributors to ask what categories they foresee being in short supply.

If the below survey is any indication, an ongoing across-the-board shortage of plasma, LCD, flat-panel and DLP-based TVs will continue into the fourth quarter. But, it doesn't stop there. Various models of digital cameras, phones and PDAs also saw spot shortages, and this combined with high demand, might impact retailers' bottom lines during the busiest time of year.

In some cases, distributors used their foresight and experience to increase supply earlier in the year, and are hoping this will pay off now with happy retail clients. But, in other cases, there's not a lot that can be done to counter parts shortages at the manufacturer level, distributors said. For more specific distributing strategies, read on.

TWICE:As we enter the fourth quarter and approach the holiday selling season, which of your products or product categories do you anticipate being in tight supply? What steps are you taking to ensure your client retailers are taken care of?

Jeff Stevenson, D&H, division manager: Plasma TV, DLP TV product, LCOS TV product and DVD product. We made a commitment to bring product in early in quantity, to have in stock and be in front of the demand curve in peak season.

Carl Mandelbaum, Electrograph Systems, VP/marketing: We are not experiencing short supply on any product category at this time.

Judy Feller, TeleDynamics, partner: Most of our vendors have played very close to the vest this year with regards to inventory. They bring in a 30-day supply of goods and stay close to customer's projections. Since we expect to see tight supply in almost all of our consumer electronics categories, especially in 5.8 GHz cordless phones, TeleDynamics is stocking up so we will have enough inventory to last us through year-end. Having inventory available to ship the same day our customers order is one of the key reasons our customers buy through us.

Joel Blank, BDI Laguna, executive VP: 15-inch LCD PC panels are very tight and have gone up in price. Digital cameras from the majors are tight, and DLP rear-projection TV is very tight — can't get enough. We bought early. I've learned to trust our manufacturer reps when they tell me there are component shortages. A lot of times, the only way to make money is to be a "have" rather than a "have not." We started working on our holiday forecast back in May. We bought big. We also second source on goods we have promised.

Ted Green, The Advantage Group, executive director: We're seeing tight supplies across the board, but specifically in flat-panel TVs, plasma TVs and DLP-based products. It's probably a combination of two things: Many manufacturers servicing many of those categories were conservative in their estimates for 2003 and then business has held up better than they expected. We're working with our suppliers to do everything we can to fill their needs. … We do our best to beef up our inventory to deal with spot shortages, but we're almost always chasing our tails in that regard.

Chris Smith, Cellstar, VP/U.S. sales and marketing: There is not a product (wireless phone) that we get from a manufacturer today that is not in short supply. We are on calls virtually every day with manufacturers to discuss our orders and shifting delivery dates. There are a variety of reasons — one of which is that the larger carriers are buying more phones due to [the upcoming] number portability. There have been problems across the board with shortages of components, particularly LCD screens. The bottom line: our business is better than it has ever been, and we are managing this process on a daily basis.

Robert Pinion, Carolina Wholesale, VP: Most product lines will be readily available for holiday season. Availability of consumer telephones lines will be somewhat limited due to several brands exiting from the industry (i.e. Phonemate) and Panasonic historically has availability issues around Christmas. There will be limited availability on Hewlett-Packard and Brother machines over the next 30 days due to a significant number of models being discontinued and new models being introduced. However new models are expected to be readily available for the Thanksgiving-to-Christmas selling season. Big-box retailers and power-channel players will display a limited number of models but have ample supply of each. The dealer/distributor channel will be stronger this year than last. Sales are expected to be strong this year, especially for multifunction machines and handheld devices (digital recorders and PDAs). Color imaging products are also expected to be strong.

Warren Chaiken, Almo, senior VP: What I see a problem in is plasma and LCD. The only other area that might be problematic is digital projection TV. I think with the economy doing better and people feeling better about themselves, they are starting to open their pocketbooks. My feeling is that the suppliers cut back earlier in the year, and now they're playing catch-up. We are looking at other manufacturers that we don't typically buy from. There's a lot of Chinese product out there and product from other areas, but we pride ourselves on offering the quality brands we've been offering. But we're debating going through new manufacturers.

Dave Robison, DSI Systems, CEO: The 50-inch RCA DLP. The demand has just gone through the roof. We get a slug of them in and they're gone in one or two days, and then we're out for three more weeks again. Also, DirecTV has launched a very aggressive promotion on its TiVo-combo unit, and those will be in tight supply through Christmas. I think digital projection televisions are going to be in tight supply. The strategy we're using is to be sure we're taking care of those retailers who have been loyal to us. The second strategy is that we're really communicating with our retailers … suggesting they shift their focus to models that are going to have better availability.

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