NEW YORK — Ten days out from Thanksgiving, retailers are locked and loaded for another hardscrabble holiday season in which turkey dinner has been usurped by pre-Black Friday sales and even the latest and greatest technology — 4K UHD TV — has become doorbuster fodder. Still, merchants remain confident that an upbeat consumer mood, combined with a host of compelling new tech products, have the makings of a merry fourth quarter. “I’m optimistic about the holidays,” noted Leon Temiz, veteran New York area A/V merchant and principal of Electronics Expo. But Temiz tempered his glad tidings with concern for 4K, as evidenced by Best Buy’s lead Black Friday item, a $900 Samsung UHD TV.
“TV manufacturers are going nuts with Black Friday pricing; you’re getting 10 percent margins at most,” he said. “It’s crazy, and some manufacturers will extend it beyond Black Friday.” But Dennis May, president/CEO of hhgregg, said he welcomes some of the price moves, which could help make UHD a volume category. “That’s going to allow us to drive even a greater portion of our business into that innovative category,” he told investors on a recent second-quarter earnings. Indeed, the multiregional chain expects that 4K will constitute over 20 percent of its video business during the holiday, or more than double the industry average, May said, and is working closely with vendors to protect its inventory from price adjustments.
Despite an extra shopping day between Thanksgiving and Christmas, May anticipates another aggressive holiday period, and has prepared hhgregg with competitive promotions and the extended holiday hours it lacked last year. This time out, “we’re excited about our holiday plans. We’ve got great promotions planned.
We’re going to be competitive around price. We’re going to be competitive around our store hours. So we’re looking forward to getting to it.” His stance supports The NPD Group analyst Stephen Baker’s forecast, and fear, that “this will be the most aggressive holiday for pricing and promotion in years … resulting in total revenues that will likely be flat at best due to the promotional environment.” Baker further believes the price wars will continue into next year, and that intense price competition will be “the industry issue” of 2015.
On an NPD holiday webinar last week, Baker also predicted an “outstanding” Black Friday that will siphon off sales from December, and strong consumer demand for basic fitness bands; low-priced notebooks; smartphones and accessories; 4K TV – whose sales “will exceed everyone’s expectations” – and Bluetooth speakers, which he expects will be “the fastest growing large product category” of the season. Bob Lawrence, outgoing CEO of the $13 billion BrandSource buying group for independent dealers, also anticipates “a good holiday season,” but as reflected by Baker’s list, believes it will be “very modelspecific, rather than strong across the board.” “The promotional environment will also be pretty aggressive,” Lawrence observed, “but people are out there spending.”
Retail bright spots include custom install, which is “doing really well,” and an improving appliance business, buoyed by holiday entertaining. “What happens around November is people have company coming for Thanksgiving and they’ll have one burner working, so it’s time to buy a new range,” Lawrence said. Like others, Amazon.com also has high holiday hopes for 4K UHD TV, which is now “more affordable than ever,” a spokesperson told TWICE. The advanced TVs join wearables and home automation on a short list of key CE holiday categories that are generating “customer excitement,” the No. 1 e-tailer said. To avoid the delivery delays that plagued e-tailers last year due to severe winter weather and a flood of last-minute orders, Amazon said it is “working closely with carriers to ensure on-time, fast delivery for our customers this holiday.”
In addition, the company is building sortation centers across the country to enable Sunday delivery and faster shipping times. Amazon presently has eight sortation centers up and running and plans to have more than 15 operational by year’s end, the spokesperson said. Meanwhile, eBay said its strongest CE categories going into Holiday 2014 include cellphones, laptops and tablets, digital imaging, and video game consoles and titles, with Sony’s PlayStation 4 topping the list as the highest-volume CE item in the third quarter, a spokesperson told TWICE. Fueling its CE sales are eBay storefronts operated by leading vendors and retailers including Acer, Beats by Dr. Dre, Best Buy, Microsoft, Monster, RadioShack, Sony and Toshiba, the spokesperson said. Also high on Holiday 2014 is Almo Corp., the national A/V and majap distributor. Product management VP Rick Wigen foresees a strong Black Friday and holiday season driven by 4K TV, larger-panel TV and aggressively priced mid-size LED TVs. “Appliances are also poised for a strong season,” he noted, “as home sales are up and vendor promotions will entice those customers that have been waiting for a deal.” Curt Hayes, president/CFO of distributor Capitol, is even more upbeat. “This holiday season will be one of the best in years for the CE business,” he told TWICE. “New smartphones, UHD, gaming and the continuing expansion of audio options all point to strong sales across the board. “In particular,” he said, “the relative abundance of TVs compared to previous years will make home theater one of the big successes of the season. Every one of these product categories will contribute significantly to a healthy season for CE.” Dennis Holzer, executive director of The Power- House Alliance distributor consortium, is also optimistic. “My outlook for the fourth quarter is that sales will be very good and provide a nice increase over last year’s sales for the same period,” he said. “Several of the same categories over previous fourth quarters will continue to do well – TV’s, phones, tablets – with the addition of several new categories like wireless products and health wearables that are on the rise.” He added, “Dealers who forecasted and brought in the stock early will do well, and should have a very good and more profitable fourth-quarter than in recent years.” Jeff Davis, senior sales VP president at D&H Distributing, said his company too is “optimistic about the holiday season as economic indicators show a level of increased consumer confidence. Categories such as DIY, Wi-Fi- enabled home thermostats and security locks are seeing encouraging sales,” he noted, “and 4K Ultra HD also continues to show promise.” Fred Towns, president of New Age Electronics, expects that the early Black Friday promotions will lead into “a robust holiday season,” citing a recent report from the Consumer Electronics Association (CEA) pointing to rising consumer confidence and tech spending.
“This uptick, combined with recent product launches including new smartwatch and fitness tracking devices and multiple new gaming releases, is sure to drive shoppers in-store early and online for a successful holiday season,” he said. Towns is particularly hot on wearables and home automation, which will “help create an exciting buzz at retail.” He added: “This season it’s all about the personal ecosystem — smartphones and smartwatches, tablets and downloads, phablets and data plans. Whether the user prefers Android or iOS devices, this season will offer just about everything to meet the needs of today’s consumer.” For Bill Stewart, CEO/founder of Petra Industries, the encouraging CEA report and the return of consumer confidence to its highest level in years bodes well for Q4.
Besides, he said, “consumer electronics and accessories are always among the hottest-selling holiday gifts, so we expect our business and that of our customers to be very good this holiday season.”