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Top 100: The Bigger They Are, The Harder The Rest Fall

Top 10 tech dealers dominate an industry

One of the keenest aspects of the TWICE Top 100 CE Retailers Report, besides the numerical rankings themselves, is the wealth of industry insights derived from slicing and dicing the data.

Most intriguing, and many would argue alarming, are the sales breakouts by ranking and channels of distribution. While most of the tabulations remained relatively static year over year, they depict a business sector that, like most areas of the U.S. economy, has consolidated down to a handful of core power brokers that continue to tighten their grip on the rest.

That the tail wags the dog is particularly apparent in CE retail, where the 10 largest tech dealers control a mind-boggling 86 percent of Top 100 revenue — which itself represents well north of 90 percent of all U.S. CE sell-through.

The illustrious Big 10 is led by the fearsome foursome of tech sales: Best Buy, Amazon, Walmart and Apple. All save for Walmart, which is still finding its CE footing, saw big gains in 2017, with Apple’s sales soaring 11 percent on the excitement of multiple iPhone launches.

Fifth-place Costco similarly mounted a solid 7-percent surge, as loyal club members, beset by increasingly complicated technologies, continued to seek out the warehouse club’s tightly assorted, good-better-best selection of TVs, computers and other advanced devices that were once off limits to the mass merchant channel.

See: The Top 5: What Moved The Needle For Tech Retailers In 2017

Taken together, the Top 10’s stride toward $120 billion in 2017 sales siphoned off another percentage point of market share from the remaining 90 retailers, who were left to vie for the 14 percent of Top 100 business left on the table.

Not to take away from their merchandising smarts and the customer experience they provide, but some of the credit for their consolidation must go to 12-ranked Sears. Faced with steep sales declines, the company made the bold decision to step away from traditional CE selling and pivot toward connected devices and smart home.

But failing to change the trajectory of its tech business, Sears is once again integrating legacy CE, leaving a 15 percent sales decline in its wake. Combined with an ailing office supply channel, where both Office Depot (No. 13) and Staples (No. 15) suffered low double-digit declines, the next largest-volume tier of tech dealers, Nos. 11-25, ceded 7 percent of their sales last year, which fell from $12.3 billion to $11.8 billion.

See: TWICE 2018 Top 100 CE Retailers Report: Call It A Comeback

The concentration of sales power in CE retail becomes painfully apparent with the next 25 ranking retailers (Nos. 26-50), who comprise a quarter of the listing but only 4.2 percent of its sales. This group, which includes such industry favorites as Crutchfield, Abt and Video & Audio Center, suffered at the hands of Conn’s (No. 29), Kmart (No. 33) and Bose (No. 26), each of which endured double-digit declines as Conn’s deemphasized tech, Bose stores fell out of favor, and Kmart continued to whither on the vine.

Together this tier declined 5 percent in dollar volume, to $5.8 billion, roughly equivalent to Costco’s annual take in tech.

Local dealers and national chains with minimal CE presence are represented more heavily in the bottom half of the chart. There, outliers like JCPenney (No. 84), Family Dollar (No. 95) and the vestiges of Vann’s (No. 97) hold 50 places on the rankings, but just a mere 1.4 percent of Top 100 sales.

See: Where Would The Buying Groups Rank On The 2018 TWICE Top 100?

But when viewed by channel of distribution rather than by sheer sales volume, it is the consumer direct contingent, comprised of e-tailers like Amazon and Newegg; catalogs like Crutchfield; vendors like Dell and HP; and televised merchants like HSN and Evine, that reign supreme. Thanks to the mighty Amazon, this class of trade controls some 29 percent of Top 100 revenue, or just shy of $40 billion.

Next up are the multiregional electronics and appliance stores, of which only two remain: the big-box category killers Best Buy and Fry’s. Led by Best Buy’s No. 1 standing, this delineation accounts for 24 percent of Top 100 sales, or $33.5 billion.

The full-line mass merchant class, led by Walmart, Target and Sears, ranks third, with $28 billion in CE sales, or one-fifth of Top 100 revenue.

See: The Top 5: What Moved The Needle For Tech Retailers In 2017

Tech-only purists like Apple, Bose, Video & Audio Center and NATM’s Video Only (No. 44) make up the fourth-largest grouping, which mustered $15 billion in sales last year, or about 11 percent of the rankings.

Together these four distribution channels controlled 83 percent of all Top 100 dollar volume last year, leaving the warehouse clubs, home improvement centers, office supply stores and smaller-market tech dealers to slug it out for the remainder.

See all Top 100 multimedia coverage in the TWICE Research Center.