Following a similar pattern that we noticed last year, consumer electronics retailers reported a drop off in confidence following the end of the holiday shopping season. As the calendar flipped to the second month of 2018, our Dealerscope CE Retail Confidence Index (DS Index) checked in at 188.89, nearly 18 points lower than January’s score, which was a record high for the DS Index.
The decreased confidence level was slightly higher than the January-to-February drop off last year, but the DS Index was coming down from an all-time high. And, on a year-over-year basis, CE retailers confidence score is actually nearly a point higher in 2018.
Continuing our theme for 2018, which involves diving deeper into the how the store type impacts the DS Index score each month, Dealerscope did find that there was a significant decrease in confidence among the independent portion of our respondents. Independent CE retailers saw their confidence score drop by nearly 26 points month-over-month, regional chains had a drop off of 11 points, and big box stores fell slightly less than 1 point. Given that the majority of the Dealerscope audience—and thus, survey respondents—are independent stores, that disparity, which reflects the true demographic of the CE retail landscape, is what resulted in the big downturn in overall confidence.
Dealerscope did notice an increased number of retailers citing weather as part of the cause for concern as we get deeper into winter throughout the country, as well as the turnover as seasonal staff starts to exit their workforce.
One retailer in particular pointed to concern over an excess of TVs in stock after the holidays. “Comping TV revenue will become more difficult in the next 60 days or so as there will be a number of end-of-life close-out offers on some key 2017 ‘premium’ TV models,” they said. “This is the result of overzealous holiday forecasts by some vendors, and has created unplanned excess inventory in the upper price bands.”
On the opposite end of the spectrum, with regard to TVs, another retailer said promotions around the Super Bowl and Winter Olympics this year gives them reason to be optimistic heading into February.
A likely major reason why retailers experienced a skid in their confidence level was their sales performance during the month of December. Despite reports that the retail industry performed exceptionally—and even at least one report that independents in particular were experiencing better-than-expected holiday results—those surveyed for the DS Index this month told a much different story.
According to our data, 43 percent of CE retailers said they missed their sales goal for the month of December, which was a 27 percent increase month-over-month, and it was the highest percentage to have missed sales since June (46 percent said they missed sales goals that month). Broken down a little further, 29 percent said they missed their sales goals by between 1 and 10 percent, and 14 percent missed their goal by 11 percent or more. Of those surveyed, 26 percent said they hit their sales goal in December, while 31 percent said they exceeded their sales goal.
Year-over-year, the numbers are somewhat comparable. A slightly larger percent said they missed their sales goal this year compared to last December 43 percent this year, compared to 37 percent last year). Another 33 percent reported hitting their goal last December, while 30 percent said they exceeded their sales goal.
Broken down by store type, regional chains performed markedly better than their big box and independent counterparts, according to the DS Index results. Eighty percent of regional CE retailers said they either hit or exceeded their sales goals in December compared with 50 percent of big box stores and 52 percent of independent stores. And as for those who exceeded expectations, 50 percent of big box and independent stores said they were in the green compared with just 26 percent of independent stores.
It wasn’t a good month on a by-product basis. Eleven of the 13 product categories that Dealerscope surveys for experienced a drop from January to February. The overall average for the month was a 6.91 for all products, which was down from 7.3 in January.
Oddly enough, the only two categories that did experience growth this month were two of the historically-weaker product categories in the DS Index—Wearables (up 0.51 points) and VR (up 0.32 points).
The biggest losses, on the other hand, were experienced by some of the historically-stronger categories. Smartphones had the biggest decline (-1.13 points), followed by Laptops/Tablets (-0.93), Gaming (-0.92), and Digital Imaging (-0.57).
Again, the breakdown by store type showed that independents experienced the greatest drop in terms of average by-product confidence levels, falling roughly 1.3 points. Regional chains also saw their score drop by around 0.6 points. Big box stores, meanwhile, actually saw some gains, rising 0.63 points.