Posted: December 16, 2013
Sales of electronics are expected to be up for the first time in 3 years, according to NPD Group, which provides market research analysis for the consumer and retail industries. But even though real wages and personal income is up, consumers remain cautious, and the fight to win shopper traffic and sales has intensified in a market that in recent years has seen Circuit City go belly up and Radio Shack fairly decimated.
Most retail CMO’s expect consumer electronics will be both the top performing as well as the most heavily discounted. According to the Consumer Electronics Association, electronics sales are projected to increase 4%.
Wal-Mart reports that tablets already account for four out of its top five items in layaway. This marks a continued shift in consumer preference from traditional toys to modern consumer electronics as holiday gifts. The number of retailers expecting consumer electronics to be the hottest category has increased from 24 percent to 69 percent from 2009 to 2013, while those citing toys have decreased from 39 percent to 3 percent over the same period.
Wal-Mart ordered 65% more TVs and twice as many tablets as it did last year for Black Friday and will sell 32-inch TVs for $98.00 and give away $100 gift cards to people who buy iPad Minis.
Since tablets are more accessible and affordable and as more and more shopping transactions are executed on tablets, it makes sense that sales of tablets are expected to grow 60% this holiday season compared with last year. Non-Apple tablets are gaining ground and are expected to be a substantial part of the tablet craze. FBR Capital Markets estimates that Apple will ship 21 million iPads in the fourth quarter alone, up from 15 million in the fourth quarter of last year.
Best Buy, Wal-Mart, Target and Staples are all planning to match their rivals’ prices if shoppers ask. This can spell trouble for Best Buy, which has seen its stock price triple and profits increase this year, after a disappointing 2012. Best Buy’s online efforts have also been paying off and could see future dividends. With a prediction of $2 billion in online sales, Best Buy’s growth could reach double digits. Their own price matching and strategies have proven they can fend off online encroachments, but fighting a price war on two fronts may be challenging. Increased foot traffic and lower overhead costs seem to be aiding the retailer on the comeback trail but the real test will be the end-of-year holiday push.
Other indications the electronics sector will spur holiday sales is the release of two new videogame consoles: Sony’s PlayStation 4 and the debut of rival Xbox One. If Sony’s predictions are right, the PlayStation should achieve over 1 million in sales on the first day of release. NPD Group thinks product releases like this should get more shoppers through the door.
Sales at electronics and appliance stores in the last six months were very strong. Some analysts believe the sector got a boost from Apple’s introduction of the new iPhones. But sales may be generated at the expense of profits as retailers will likely have to do more discounting to get people into stores.
But getting people in is what retailers are counting on. Wal-Mart isn’t taking any chances. Wal-Mart’s Head of General Merchandise, Steve Bratspies, knows these are the things that lure people in and once there, the expectation is they’ll fill up their shopping carts with other items.TAGS: retail, management, work in retail, career, retail trends, retailers,