NEW YORK – After years of recessionary beat down, CE retailers say business is finally rebounding, and was downright booming for Christmas.
According to merchants queried by TWICE, a combination of lower gas prices, greater consumer confidence, and a resuscitated TV business made Holiday 2014 the best since the banking crisis of 2008.
“If Christmas was over tomorrow our guys would be okay with it,” said Tom Hickman, electronics senior VP for the $15 billion Nationwide Marketing Group, one week out from the holiday.
Hickman said December sales were tracking well versus November, without the pre-Christmas choppiness typical of past years.
“There’s a lot of good economic news out there,” he said. “Consumer confidence, housing starts and the stock market are all up.”
Also driving the good cheer was 4K UHD TV, which has piqued consumer interest and, despite some stomach- churning promotions, restored big-ticket pricing to a core CE category.
“Our guys are enjoying the early-adopter product cycle,” Hickman noted, with sales with at least one TV manufacturer up 30 percent year-to-date. “ASPs [average selling prices] and profits are up.”
4K pricing also managed to recover from the “price point shockwave” of Samsung’s $899/$999 promotions. “Prices were twice that two weeks before Black Friday. You never want to see a price point on technology do that,” he said.
Nonetheless, the UHD doorbusters served to raise 4K awareness, drive traffic and contributed to the overall holiday lift. “It is a double-edged sword,” Hickman acknowledged.
For members of ProSource, the $4 billion-plus A/V and custom-install division of the BrandSource buying group, “This was probably the most positive holiday season since 2009,” said Dave Workman, president/COO.
“4K technology has given the consumer a reason to spend more,” Workman observed. “It’s still a small segment, but it already comprises more than 30 percent of our TV sales and as much as 80 percent for some of our dealers.”
ProSource dealers also did “extremely well” in wireless multi-room audio and installation services, he noted.
In Workman’s view, the holiday bounce is more than just a “one trick pony.”
“It’s more of a momentum shift,” he said, as business continued to accelerate from September.
For BrandsMart USA, 4K has also been “hot, hot, hot,” echoed Michael Perlman, president/CEO. “Customers want the best TVs, and they are all 4K.”
Perlman described the holiday season as “decent” as of mid-December, with sales up by the single digits, led by strength in TV.
4K was also trending high at Best Buy. There, the displays represented about 15 percent of the chain’s total TV assortment for the six weeks ended Dec. 19, and were selling at a median price of $2,500 the week before Christmas, a study by retail analyst Aram Rubinson of Wolfe Research showed.
Perhaps the king of 4K is Southern California’s Video & Audio Center, which has served as a launchpad for key introductions and reaped the benefits this past holiday. Sales of 55-inch and larger models were up 83 percent for the 30 days leading into Christmas and have more than quadrupled overall, reported spokesman and board director Tom Campbell.
“This format is on fire unlike anything I have seen before,” he said.
The glad tidings were reflected in the U.S. Census Bureau’s November retail sales numbers. Sellthrough spiked 6.9 percent to $9.4 billion for CE and appliance dealers, outpacing furniture, clothing, drug and department stores.
For e-tailers, the gains were even more pronounced. Groupon, the deal-of-the-day marketplace, reported a record-breaking Black Friday weekend in North America, with sales up 25 percent through Cyber Monday. Leading the charge were such CE items as Asus’ Google Nexus tablet with 1080p display, and the Chromecast and Roku streaming set-top devices, the company said.
“This holiday has been extra generous,” agreed Jon Abt, co-president of Chicagoland’s multichannel Abt Electronics. “It started early, and picked up steam in December.”
In between, the mega-store enjoyed a 50 to 60 percent spike in web sales for the week leading up to Cyber Monday – including a record Thanksgiving – and a 10 to 20 percent hike in in-store business year over year, despite staying closed on turkey day.
“We were floored by the traffic and sales volume,” he said.
Like others, Abt had “a great season” in 4K (“Customers came in asking about it,” he said), particularly within the 60- to 65-inch “sweet spot,” although a herky-jerky promotional calendar, as set by vendors, “made the retailer look like the bad guy” when sale prices fluctuated.
And some of the discounts “were too good,” he added.
Nonetheless, manufacturer-controlled pricing helped the entire industry enjoy “some great gains for holiday,” Abt acknowledged.
Beyond 4K, Abt enjoyed brisk business in plasma TVs, as fans flocked to the end-of-life technology, and saw “real good sell-through” in Bluetooth speakers and headphones, particularly by Beats and Bose (“They really own those categories,” he said.)
The retailer also reported moderate demand for the Fitbit-dominated wearables category, with Abt sensing that “consumers feel their phone is their wearable.”
Outside of CE, the dealer enjoyed a “surprising” business in major and luxury countertop appliances, kick-started by some “pretty aggressive offers” over Black Friday.
The company also had “an amazing season” in mattresses. “I’m surprised by how good it’s been,” Abt said.
But the flipside of strong demand, at least in TV, was unfilled orders. “Even though we forecasted for the season, we had issues with back orders,” he said, which vendors attributed to the West Coast port strike and Abt attributed to vendors’ build-to-order manufacturing.
Warren Chaiken, president/CEO of national CE and appliance distributor Almo Corp., experienced “some spot shortages in some screen sizes,” but for the most part kept his customers in stock thanks to “better planning by us and the manufacturers.”
Despite strong consumer interest in 4K and more affordable pricing, Chaiken said the category still remains constrained by limited native content.
He added that the holiday season was similarly curtailed by the lack of a “must have” product phenomenon, akin to the Cabbage Patch dolls of years past, although low oil prices and a strengthening builder market portends a robust 2015.