Consumer electronics retailers are riding a three-month streak of confidence gains as the summer season nears. Retailers registered an overall confidence score of 207.55 entering May, setting a new all-time high for the Dealerscope CE Retail Confidence Index (DS Index). That score beats the previous record of 207.47 that the industry achieved in January 2018. Year-over-year, the DS Index is up 15.6 points over last May.
Retailers pointed to news of a strong and improving economy as well as exciting new product announcements and vendor and internal promotions for the month as the basis for their increased confidence in May. This month is also the start to a strong stretch of retail holidays, including Mother’s Day, Memorial Day, Father’s Day, and graduation season—typically strong times for the retail industry in general, and especially consumer electronics as the Dads and Grads promotions get underway.
Broken down by store type, the Big Box segment was again the strongest category of retailer, setting another record-high with a 244.13 confidence score in May, up nearly 10 point from the 235.63 score posted last month. The Independent channel checked in next with a confidence score of 195.38, up slightly over last month. Regional retailers came in “last” with a May confidence score of 185.25—again, up slightly over their previous month’s score.
Despite the continued month-over-month rise in each of the respective retail categories, it hasn’t been great news all around. While both the Big Box and Independent channels are tracking above their scores from a year ago, the Regional retail segment is markedly not. The latter segment had a very strong streak from January through June of last year where they were far and away the strongest segment of the CE retail channel. That has not been the case this year, with Regional retailers being unable to get anywhere near those totals. The 185.25 posted this month is their highest confidence score this year, and a little more than 25 points shy of the 210.6 score recorded last May.
One potential explanation: At least one Regional CE retailer reported that demand for premium TVs and major appliances has been softening. Those two categories are of particular importance to this channel, almost as much as Independents, in terms of overall success of a store.
Along those same lines, and seemingly in spite of the fact that the DS Index did set a record high in May, the CE retail industry reported slightly worse sales goal performance than a month ago. Granted, the numbers represent a major improvement over the November-January range, they did dip slightly on a month-over-month basis.
Overall, 68 percent of CE retailers said they either hit or exceeded their sales goals in March, down from 73 percent in February. Broken down in a little more detail, we found that nearly 11 percent fewer said they simply hit their sales goals for the month (42 percent in March, compared to 53 percent in February). That difference was mainly realized in the percentage of retailers who exceeded their sales goals by more than 10 percent (8 percent in March vs. 0 percent in February).
Powered by Products
With sales softening, the push upward in the overall DS Index score was mainly driven by impressively strong product category results entering May. The average score for all products was 7.32 this month (on a scale of 1 to 10, with 10 being most confident). That marks the first time this year that the figure checked in above 7.0, and the first time since last December that it did so.
Perhaps even more impressive was the performance of each product category compared to its lifetime average. Of the 13 categories that Dealerscope surveys for, 11 of them scored above their lifetime average in May. Products averaged a score that was 0.63 points higher than their lifetime average this month. The most notable difference was achieved by Connected Home, which was the strongest category this month. Retailers rated Connected Home an 8.67 in May, 1.42 points higher than its lifetime average.
It’s going to be incredibly tough for the CE retail industry to keep up this kind of pace, and we have a hard time foreseeing another record-setting month. But the way the industry has been going, and as long as the economy remains healthy, anything is possible. Right?