CE retailers have hit a new high mark in our monthly Dealerscope CE Retail Confidence Index (DS Index). Heading into the new year, the DS Index score rose a little more than 7 points to reach an all-time high of 206.47. That eclipses last year’s high of 203.56—also set in the month of January. Following the year over year trends, Dealerscope anticipated that the DS Index, which has been on a tear over the past four months, would continue to climb and potentially hit a mark not previously seen in the survey’s history.
According to retailers who participated in the survey, the rise was credited to things like the improving economy, a long list of projects in the queue, and the anticipated boost in spending from the pending tax cuts that recently were signed in to law by President Trump.
“Consumer confidence is at the highest it has been in the past five years,” one retailer said. “Also, they are shopping for premium product,” which has helped boost average sale price for some retailers.
Another retailer reported seeing “steady growth for the past two years.” Additionally, their “custom integration business is growing thanks to the support of the new Atmos Audio and OLED category,” they said.
As the calendar flipped to the near year, Dealerscope wanted to take the opportunity to gauge CE retailers’ confidence for the year as a whole. Likely helped by the fact that they’re currently riding an all-time high in overall confidence, CE retailers were particularly bullish about their 2018 outlook. When asked to identify their 2018 outlook on a scale of extremely positive to extremely negative, the scales were tipped tremendously in favor of the positive side. In fact, not a single retailer identified their outlook as extremely negative, and only 2 percent selected somewhat negative.
Beyond the percentages in the chart above, anecdotal evidence provided by retailers helped to show how and why they’re so positive heading into the new year. Again, the tax bill and improving economy were cited by plenty of retailers. But there was also a lot of talk of expanding operations, hiring new employees, remodeling showrooms, expanding product categories, and more. Retailers are actively pouring money into their businesses, which offers a more detailed picture of just how confident they are heading into 2018.
“With the economy improving and stock market on highs, I feel there could be more spending money available to customers. This could help to improve sales in 2018,” one retailer said.
Added another retailer: “We are planning to add to some departments and add staff for e-commerce and social media. As we do so, we expect results.”
Sales Performance Soars
Hand in hand with the improvement in the overall confidence score, we’ve also seen CE retailers’ performance against their sales goals drastically improve as well. That said, we’ve never seen a month like the one CE retailers reported for November. The performance, while exceptional in the CE retail industry, could’ve been anticipated given how positive Black Friday and Cyber Monday reports were throughout the final weeks of the month. The retail industry in general experienced one of it’s best months ever in November, and CE retailers were a major benefactor of consumers’ spending.
The 16 percent that reported missing their sales goals (9 percent missed by between 1 and 10 percent, and 7 percent by 11 percent or more) was the lowest total in the history of the DS Index. Conversely, the 84 percent who hit or exceeded their sales goal was the highest in the survey’s history. Broken down further, 42 percent reported hitting their sales goal (a record high), 27 percent said they exceeded it by between 1 and 10 percent, and 15 percent said the eclipsed it by 11 percent or more (also a record high).
A Focus on Store Type
New this year, the DS Index will place a greater emphasis on how the different store types respond each month to the survey. It’s something that Dealerscope tested out last summer during the Index’s nosedive. At that time, we tried to explore the impact of store type on confidence levels, and it was solid practice for what we think will be an intriguing and beneficial tool for CE retailers moving forward.
As we noticed during the summer slide in the DS Index, the Independent retailer’s confidence level remains lower than the rest of the industry. Inherently, a single store or independently owned retailer is going to face more pressures, stress, and threats to their business than a regional or big box store. When you’re battling those larger chains as well as the likes of Amazon and other strong ecommerce operations, it’s easy to understand why your confidence level might be a little lower than the “bigger guys” out there.
That said, confidence levels were high across the board no matter the store type. Independents did fall behind the overall confidence level, checking in with a 198.55, while Regional stores led the way with a 219.37, and Big Box stores checked in at 209.25.
One area independents excelled at, though, was sales performance. A greater percentage of independents reported hitting or exceeding their sales goals (88 percent) than their regional counterparts (80 percent). Additionally, half of independents said they exceeded their sales goal, compared to 40 percent for independents. Big Box stores all reported exceeding their sales goals.
Then there’s the product category confidence by store type. Again, independent stores brought up the rear when it came to their by-product confidence levels, but they were all relatively high. What’s interesting to see, diving deeper into the product numbers is that, for the most part, the product rank the same no matter the store type.
Smartphones ranks as the top category no matter the type of CE retailer, while Emerging Tech, VR, Wearables, and Digital imaging ranked among the lowest confident categories.
Overall Product Confidence
Looking at products from a survey-wide perspective, things continued to trend upwards in January. Ten of the 13 categories were up month-over-month, and the same number grew year-over-year. The same three product categories were down in both instances: Wearables, VR, and Headphones.
Two of the three aren’t so surprising, but to see Headphones dip—albeit ever so slightly in both occasions—especially around the holiday season when it’s a category that generally thrives, is certainly a bit of a shock. Retailers didn’t offer any anecdotal reasons as to why they were less confident in the Headphone market, but a general lack of innovation and rising price points as manufacturers begin to more-heavily target the low-end audiophile market could help to explain the dip.
Conversely, we continue to see the rebirth of the Digital Imaging category from a confidence perspective. Year-over-year, this category say the most growth, jumping a point and a half over January 2017. It still ranks in the middle of the repack as far as how it stacks up against the other categories that Dealerscope surveys for, but it’s been on a tear since being one of the lowest-ranked categories. With the exception of a minor setback in September, Digital Imagine has seen its monthly confidence level go up in four of the past five surveys.
The top five products by confidence level remain mostly unchanged. In order, they are: Smartphones, Connected Home, Laptops/Tablets, Gaming, and Headphones.