CE Retail Confidence Crashes in August

The dog days of summer hit the Dealerscope CE Retail Confidence Index hard entering the final full month of the season. As the calendar flipped to August, the DS Index saw its score go from the third-highest on record to a new record-low, checking in at 155.19. Prior to this month, the DS Index had experienced a sting of successful months, including three straight months with a score over the 200-point threshold.

August didn't seem to care.

A number of different data points stand out and help point to why specifically the DS Index experienced such a crash, but several external factors are also worth mentioning. Just as the monthly survey was coming to a close, the latest salvo in the U.S.-China trade war was fired, with President Donald Trump signaling his intentions to lay another 10 percent tariff on $300 billion worth of Chinese goods starting September 1.

Throughout 2019, and even stretching as far back as Q3 of 2018, DS Index respondents each month have mentioned uneasiness around the trade relationship with China and how it could (and has) impacted the consumer electronics retail business. Despite declarations by the administration that consumers wouldn’t feel any impact of the tariffs, retailers and tech brands have made states quite to the contrary. Appliance prices were the first key indicator that President Trump’s tariff policies were going to result in price increases across the board—if not right as they went into effect, then surely down the line.

Beyond tariffs, some retailers pointed to slower foot traffic expectations as customers return home from vacations and kids head back to school. Others cited their ongoing struggles to compete with better-priced product from ecommerce-only stores.

Products Sink Score

It was a rough month for the individual product categories in the DS Index. The average score across the 13 categories that Dealerscope survey’s for was a 4.58—the lowest average score to-date for the DS Index. Six of the 13 products saw their monthly scores check in at a 3.33 or lower out of 10, while no individual product scored higher than a 7.85. Only two products—Connected Home and TV/Video—scored higher than their lifetime averages. Those same two categories were also the only two to see their scores go up on a month-over-month basis.

Of the lowest-performing categories, perhaps the most surprising to see down near the bottom is gaming. August, though a generally slow month for the reasons our retailers suggested, is a time that’s usually good for gaming. This month, one of the biggest titles on the gaming calendar hits retail shelves—that being Electronic Arts’ Madden football franchise—and we’re still rather fresh off of E3 and the excitement that that creates for the gaming space.

In reviewing past years of the DS Index, as we try to look ahead, August and September have been the worst-performing months for the industry. Though such a massive drop-off in confidence isn’t something we like to see, we could almost point out that some sort of confidence shedding was due. These are the rough months on the retail calendar with no real promotional material or holiday events available between the middle of July and early September. It’s a slog, but the industry will get through it like it has in the past. September may hover around these same levels, but Q4 and the all-important holiday shopping season are right around the corner. So, with that said, the outlook for the remainder of 2019 ought to be positive.