Accessories: The Industry's Viagra
With that, while we don’t like it, all these factors necessitate that we increase our product prices, which is something very unusual for the CE space. We and our competitors are all in this boat together—increasing costs have necessitated us to address price with our customers. The price increases could be seen within the next quarter. As a result of this climate, accessories can continue to provide better margins than hardware, so it’s essential that retailers optimize attachment selling. But it must be within reason.
Years ago, when DVD players were in the hundreds of dollars, you could attach $60 or $70 worth of accessories. Today, when they’re paying $70 for a DVD player, trying to get them to take cables at high prices is a turnoff for the consumer. So you have to recognize what the parameters are that the consumer is willing to spend on that attachment.
Dealerscope: What product sets should retailers pay more attention to that aren’t really on their radar yet?
Chiarelli: What you’re seeing right now is, of the core accessories categories, all are hitting on seven or eight cylinders, except for a couple that are hitting on four and five. And those all have to do with custom installation and the housing slowdown. Unterminated bulk cable is flat to down against last year. Built-in speakers, both in-wall and in-ceiling, are flat to down. These have to do with the housing starts and with home theater, so you’re not seeing the robust growth as in past years. It’s a rising tide; that boat will float as high as it can, as soon as the housing situation improves.