On the heels of a confident prediction that the industry was set to turn around made by Dealerscope in the Q3 DS Index white paper, CE retailers saw their confidence rise to its highest point since July. The 177.07 DS Index score for October brings to an end a grueling string of five straight months of decline. That said, the CE retail industry has a long way to go to get back to its peak at the start of 2017.
Echoing the results of the DS Index over the past few months, one retailer offered a very honest analysis of what the retail environment has been like this summer.
“Customer confidence has improved—this summer they could afford to travel. Consequently they were not buying CE products,” the retailer said. “They are now home and needing their CE products. CE will finish strong this year.”
It’s at least setting up for a strong finish, and the industry is going to need one if it hopes to get back to early 2017 confidence numbers.
At least one CE retailer reported setting a sales record this summer, saying traffic “has not slowed at all.”
One thing that’s helping with the confidence rebound is a general sense that traffic in stores has increased over the past month. The sentiment seems to point towards retailers’ confidence that this trend will continue in October and through the rest of the year into the holiday shopping season.
“I sense an uptick in just overall industry movement,” one retailer said. “Building or renovations seem to be increasing.”
That uptick was reflected in both online and foot traffic confidence levels in the DS Index. Retailers reported nearly full-point gains in both segments. The reason behind the increase in traffic across the board could have something to do with new product launches. As the holiday shopping season approaches, manufacturers are going to start dropping new product in the hopes of drumming up interest and sales. That, in turn, will be reflected in both in-store and online traffic.
“New product releases are a driving factor for October,” one retailer reported. “We are backing this with aggressive targeted advertising.”
Products Still Slumping
Over the course of the confidence slump, it was interesting to watch how the individual product categories would perform in relation to the overall DS Index score. For the most part, the product confidence level didn’t necessarily reflect the overall confidence. It started dropping, but not at the rate of the overall score. The biggest single drop this year happened between June and July when the average product confidence score fell off about 0.6 points from slightly above 6.8 to slightly above 6.2.
Since then, though, that number has continued to steadily decline. Even as the DS Index shot up in October, by-product confidence continued to decline.
Part of the decline can be blamed on some of the best-performing products throughout the course of the past year. Whereas categories including Smartphones, Headphones, and Gaming continue to lead the way as some of the highest rated products, they’re falling back closer to the rest of the pack.
Those three categories, along with VR and Wearables have seen the biggest decline in confidence year-to-date.
The decline of Wearables and VR is something we’ve talked about for quite some time. But the other categories are ones that come as a bit of a surprise. Smartphones—especially right now in the September-October-November timeframe when we have new iPhones launching—should be a regular chart-topping category. They are still as far as YTD average goes, but it’s interesting to see the drop off there.
Even on a month-over-month basis, those categories were some of the hardest hit.
Moving forward, Dealerscope remains confident that the DS Index will remain on an upward path as we get deeper into the final quarter of 2017.