Attitudes: State of the Industry, From the Trenches
As we head into the New Year, regional dealers, the backbone of the CE industry, have adjusted their businesses to leverage opportunities they hope will improve sales and profits over 2013. For the full story, see page 32, where the dealers go into more detail about how they overcame last year’s challenges, the vendor initiatives that made things a bit easier, e-commerce improvements, the ongoing impact of 4K UHD TVs, and the products that helped or hindered sales and profits.
Here are a few highlights that stood out from the interviews.
As usual, one of the saving graces of the industry has been the steady profit generated by accessories, especially those attached to tablets. But unlike past years, new MAP policies (which benefited other product categories, as well), helped to further stabilize and, in some cases, increase profits.
“You’re making 20 or 30 points, which at the end of the day helps you out,” said Albert Liniado, president of Datavision, in New York City, referring to tablet accessories. “I think it will be even stronger next year because more of the companies are moving to MAP.”
Higher-end, large-panel TVs also brought in solid 20 to 30 point margins, certainly not what dealers were used to before the recession but enough to support adjusted business models. Morris Home Furnishing’s Ed Robinette, along with other dealers we spoke to during the year, said Samsung’s higher-end sets (especially the F7100 and F8000 series, in Robinette’s case), with their bright picture and sensible features, sold well against the competition.
On the other hand, dealers and distributors have lamented the Q4 price drops of 4K UHD TVs from the major manufacturers. All dealers understand the realities of the market, especially with holiday pricing, the influx of cheap 4K UHD sets from China, and the need to clear out older inventory to make way for the new. But they all hope some premium pricing remains throughout 2014, given the quality and value-added features of the new sets. The challenge is that higher TV prices in today’s market, especially when the content isn’t there to justify them, are hard to support.
“It’s difficult to bring people in for (4K UHD TVs) because people are shopping for the TV they want at the right price,” Robinette said. “No one understands what 4K is, even if you try to explain it. It isn’t easy to do.”
Most new technologies are hard to explain, which is one reason why the majority of consumers are still more comfortable buying CE at brick-and-mortar stores (although online CE sales continue to increase). It’s also the reason why most dealers will continue to invest in an educated, consultative sales force.
Those types of associates were invaluable in explaining and upselling the new wave of wireless speakers to customers, who are rightly confused by the different streaming formats and speaker features. When a sales associate demonstrates the difference in sound quality, the consumer will typically buy the step-up product and increase the average ticket.
“We set up a complete wireless display, and we use $49 wireless speakers so that we can show them to the consumer and say, ‘Here’s what Bluetooth is, and here are the limitations,’” said Andy Kersey of Hamlin & Kersey Home Center and A/V Systems in Corbin, Ky. “And then we can show them what happens when Sonos and the Bose Wi-Fi speakers are introduced, where you’re stepping up the level of quality in the audio. The consumer confusion is addressed. That’s the part we feel that we do better than others, and I’d like to think the independent channel as a whole does that.”
We do, too. Good luck to all CE dealers and manufacturers in 2014. Have a great holiday and we look forward to seeing you at CES.