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Finding Money in Tablets

Dealers ponder current trends and expectations for tablets

May 8, 2013 By Nancy Klosek
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Tablets are on fire. CEA statistics show exponential growth in a variety of brands and prices, with no sign of abatement. U.S. unit shipments leapt from 32 million in 2011 to 80 million last year and are expected to nearly double again this year. The numbers are mind-blowing, but unfortunately they’re attached to products with very little margin.

So if you’re an independent dealer, what is it that makes tablets worth carrying?

From the day the Apple iPad burst onto the retail scene in 2010, tablets have served dealers as traffic-drivers and magnets for sales of much more lucrative accessories. That is still the case, said Doug Schatz, vice president of electronics merchandising for the Nationwide Marketing Group. But tablets are also an effective way for his group’s members—who sell a variety of categories, including electronics, appliances, bedding and furniture—to drive traffic and stimulate sales of lower-turn, higher-margin products.

Even for dealers who don’t sell electronics, tablets are useful for a number of reasons. One is that they attract a younger demographic; another is that, due to their varied price points, they can be used as giveaways or sold at greatly reduced prices.

“It’s good category adjacency,” Schatz said. “You have electronics-only members who’ve expanded into the notebook and tablet categories, and those involved in appliances and bedding, as well as electronics. And those who are not in electronics want to get the benefit of attraction to the category, so they integrate it into their promotional strategies.

“It’s all about getting that virtuous cycle of the best blend of traffic-driving products and higher-margin products,” he added. “It’s how it all works harmoniously to grow the business.”
Many independents have opted not to embrace the tablet category because of the low margins. Bob Cole, president of Bob and Ron’s World Wide Stereo, Hatfield, Pa., is one. But he does see the point in carrying tablets to accommodate his clients.

“If you’re going to sell a good tablet, you can’t make any money. And my customers expect to be coached on whatever they buy. My guys would lose their whole day if they had to help Sammy Jones figure out how to send email to his grandma,” Cole said. “What we do with tablets is ‘provide’ them as part of a control package, but we don’t sell them as standalones. I know several dealers who sell them to drive customer traffic, and that’s reasonable if you have that kind of retail floor where you can have staff talking to people for long periods of time and making hardly any sales at all. I can’t do that.”

 

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