The New Year is not off to such a hot start for the consumer electronics retail industry, per the latest Dealerscope CE Retail Confidence Index (DS Index) report. Retailers checked in with a confidence score of 189.05 to start 2019, which is a 14-plus point tumble from last month, and more than 17 points lower than this time last year.
January, for what it’s worth, has historically been a record-setting kind of month for the DS Index. In each of the previous two years in which we’ve conducted and crafted this DS Index report, January had set a new record high score for the DS Index, coming in at above 200 points each year. That was certainly not the case this year as retailers checked in well below that mark and reported their first month-over-month decline heading into a new year in the survey’s history.
According to retailers, a number of factors played into the declining confidence level of the industry, including political uncertainty (some even mentioning the ongoing government shutdown), looming talk of tariffs, and poor or unseasonable weather during the holidays that kept consumers away from their stores.
Collectively, though, all of those factors and stated concerns point to a single culprit for the decline in confidence: a relatively terrible month from a sales goal perspective. Reporting on their November sales performance, 42 percent of retailers said they missed their sales goals—a 15-point increase over October’s sales results. That’s not a good sign for the industry during what’s supposed to have been one of their strongest months of the year, with the Black Friday holiday shopping weekend occurring late in the month. Looked at more closely, 34 percent of those who missed their sales goal did so by between 1 and 10 percent, while 8 percent missed by greater than 10 percent. Additionally, just 25 percent said they exceeded their sales goals in November, the lowest total since May of 2017.
Regional Retailers Reel
On a store-size basis, it was the regional retail sector that really dragged down the DS Index in January. On a pure confidence scale, regional chains reported a score of 164.78—their lowest ever, compared to 182.58 for independents and a 209.55 for big box stores. Only big box stores experienced a slight increase in their confidence level on a year-over-year basis in January.
The discrepancy between store types becomes incredibly apparent when you look at how those stores performed from a sales perspective in this month’s survey. According to the survey, 72 percent of regional retailers missed their sales goal in November, while only 14 percent hit their goal and another 14 percent exceeded their goal. That’s the worst performance by a segment since last summer and easily the worst on record for the regional segment.
Products Get Pummeled
It was not a good month for the individual product segments of the DS Index either, to say the least. Every single one of the 13 product categories that Dealerscope surveys for experienced a month-over-month decline heading into January. That’s the first time that has happened in the survey’s history. And more than half (7) of those products declined more than an entire point.
The hardest hit category was Connected Home, which fell more than 1.4 points, while Car Tech fell just a few hundredths of a point. Interestingly, the five hardest-hit categories were the strongest performing categories historically. And, despite their status as the biggest losers in January, those categories still held strong in the overall rankings for January.
Foot Traffic vs. Online Traffic
Continuing to follow the foot traffic and online traffic trends, January represented a unique departure from how the two metrics have faired over the past year. Typically, the two data points have been relatively close to one another and follow the same basic trend line—be it one that’s going up or down. However, in January the two took a very stark turn away from each other with foot traffic sharply declining, while online traffic experienced a slight bump upwards.
The gap between the two (0.79 points apart) is actually one of the widest on record for the DS Index.
So, it’s beyond fair to say that January was a really rough month for the DS Index, and while it may not be the start to the year that the industry would’ve hoped for, it’s not like we come into the year not expecting a bit of a letdown. In our predictions for CE retail in 2019, we offered a bit of a hot take that, while the industry would have an all around better year, there would be some bumps in the road early on as we continue to fight through tough tariff talks and a rocky economy. That said, it is highly concerning to see sales goal performances tank the way they did in such an important month.
What we’re left with is an industry that appears to be teetering as we dive into a new year. How retailers move forward and prevent an all out collapse in confidence moving forward will certainly be interesting to follow.