DS Index: September Confidence Declines, but Shows Signs of Turning Around
Consumer electronics retailers continued to see their confidence level slip heading into the Fall months, but the drop in confidence was the least drastic that it’s been in recent memory. The September Dealerscope CE Retail Confidence Index clocked in at 166.51, down a little more than two points from August, but by far the slimmest decrease during this five-month stretch of falling confidence scores.
Retailers continued to sight slow store traffic and a lack of consumer confidence as some of the top reasons why their confidence remains low. Others pointed the finger at the White House for their struggles, and still others cited a lack of customer contracts coming in for installation projects, which supplement many independent retailers’ operations.
That said, there is room for hope—at least according to one retailer who said, “Football season will finally drive some more larger screen and higher dollar premium TV sales. Also, TV manufacturers will be introducing new 60-inch and 70-inch TV models providing more availability and affordability of theses popular screen sizes.”
And while the confidence level as a whole is down, plenty of retailers said they are quite confident. “Sales are up big time since February 2017 for us,” one retailer said. “Just carry products people want at a good price. Keep an eye on Internet sales ads, get your orders out fast, and ship to all international countries.”
Our product confidence scores reflected the continued downward trend of the average overall confidence score for CE retailers. For September, the average product confidence fell below a 6.0 for the first time in the survey’s history, hitting 5.92, down 0.1 points from a month ago.
Smartphones continued to lead the way as the product retailers are most confident about selling—not surprising this month in particular with Apple’s annual iPhone event right around the corner. They were followed by laptops/tablets, which rose more than half a point month-over-month; connected home; gaming; and headphones.
Other than that, there’s really no good news for any of the product categories in the September report. All products scored lower than their average score to-date.
And in the last six months, all products have seen major declines in their score. Some have definitely faired worse than others. Virtual reality, for example, is down 1.6 points over the past six months, which follows everything we’ve been reading and reporting on for that market—VR is in a world of hurt right now, and retailers are saying just as much. But surprisingly, not far behind AR is the audio category, which has seen a decline just shy of 1.4 points since April.
Audio enthusiasm, which was the backbone of CE, has changed,” said one retailer. “It now is either a slam-dunk as far as choosing a product, or too confusing to set up a great High Resolution system. Then there is streaming audio—nobody has a library of music anymore, and consumers are not listening to an entire album of an artist straight through. It’s the way things change.”
Other hardest-hit categories included emerging tech, car tech, and drones.
For all of the struggles that the overall confidence score has faced, retailers reported one of their strongest sales months ever (at least as far as the DS Index is concerned) in September.
Reporting on the July month, only 39 percent of retailers said they missed their sales goal—23 percent missed by between 1 and 10 percent, 16 percent by 11 percent or more. That’s the lowest total since April. Further, a greater percentage of retailers reported exceeding their sales goal (32 percent) than those that simply hit their sales goal (29 percent) for the first time since March and for only the fourth time in the history of the DS Index.
Collectively, 61 percent of retailers either hit or exceeded their sales goal, marking just the fourth time that that number exceeded 60 percent since the DS Index began surveying CE retailers last October. That 61 percent is the second-highest total in 2017, trailing only April, which saw 63 percent report that they hit/exceeded their sales goal.
Dealerscope editors expect that, moving forward as the holiday months approach, the DS Index should experience something of a turnaround. The spring and summer months clearly wore on CE retailers, especially while Amazon and Walmart have been out doing battle with one another and other retailers (hhgregg and Radio Shack) suffered greatly.
If the vibe at IFA 2017 in Berlin means anything, there’s plenty to be excited about as the holidays approach. New product launches generally result in greater customer activity. And greater activity (i.e. in-person and online traffic) should result in higher confidence scores.