Sunday, October 30, 2005
High-Tech Hot for Holidays
Who would be dreaming of a big holiday retail season in a year when the economy has been battered by everything from hurricanes to high gas prices? The answer: consumer electronics executives. Retailers are stocking up now with the products you'll be seeing for the holidays. They're betting consumers will spend big bucks on big-screen TVs, iPods and game systems.
Executives hope high gas prices, rather than denting spending, will take a toll elsewhere while consumers buy gadgets and home entertainment systems. Coupled with falling prices for flat-panel televisions and the usual crop of hot items surrounded by marketing buzz, that has some marketers making bold predictions. "You're seeing the perfect storm where everything is coming together for the best of the 25 seasons I've been in this business," said John Kelly, a senior vice president at Circuit City. Ken Bernhardt, a marketing professor at Georgia State University, is a bit less enthusiastic but agrees with the basic premise. "I think the very high gasoline prices, if they remain anywhere near these levels, may help consumer electronics," he said. "If people have less money to go out, and spend more time at home, they invest in an upgrade of their TV in particular."
Of course, that assumes consumers this year can make sense of the acronyms and options that confront television shoppers these days -- flat panel, flat screen, HDTV, digital, LCD, plasma, etc.
"There's a real potential for consumer confusion," Bernhardt said. "A lot of consumers that would like to buy one of these sets could become confused and just not buy."
Christian Roberts said he is willing to navigate TV technology to get a system that will let him be better entertained at home. "I drive a 2000 Dakota V8, and I get 17 miles to the gallon," he said. "Every time I pull in to get gas it's US$51. I'm shopping for a big-screen TV in the 55- to 61-inch range." Buyers at electronics chains already have made their major decisions on what to stock for the holidays, and they hope Roberts isn't alone in his desire to curl up next to a big-screen TV. For consumer electronics retailers, the holiday season is huge. It can be the difference between success and failure for the year. "The holidays up the ante in this business," said Mike Linton, the chief marketing officer at Best Buy.
The three-month period that includes the holidays accounts for much more than a quarter of a retailer's revenues. More than 30 percent of all consumer electronics spending occurs during that time, Bernhardt said. Flat-panel televisions have been beckoning consumers from store displays for more than five years. The fact that retailers think this will be a breakthrough year reflects a product mix that has become more evolutionary than revolutionary for 2005. It has been five years or so since the industry had a single must-have product, Linton said. That was the DVD player.
Refined or more affordable versions of flat-panel televisions, digital cameras, music players and video game consoles now are showing up high on annual gift lists. For example, iPod's Nano is simply a slimmed-down version of the popular music player from Apple. The buzz in game consoles this year is swirling around Microsoft's Xbox 360, an enhanced version of the original.
DVD recorders are now available for what a player once cost, and LCD computer monitors are now as cheap as tube monitors once were. Camcorders are moving toward direct-to-DVD or hard drive recording, while prices for miniDV tape models have fallen to the $250-to-$500 range.
But there is no single product that is expected to have the widespread draw that the DVD player once did. Instead, marketers are betting on general enthusiasm for digital products and consumers' desire to upgrade gadgets and computers they already own. "We are moving into the second phase of the digital revolution," said Best Buy's Linton. "There's a lot of customization. If you go back five or six years it was, 'Yeah, I have to get a laptop,' or a digital camera. What we are seeing now is that 'I'm going to add more choice and a lot more power to what I already have.'"
Linton also expects to see what he calls the "soccer mom" in his stores. "She will shop earlier and come in with a list," he said. "And since she's the family historian she'll be interested in products that work with the digital camera. There will be a big press on digital imaging." In fact, once you get past the consensus picks for the holidays, Kelly thinks printers made especially for printing photographs may be the dark-horse winners for the holiday season. "Now they have the digital camera, it's become the camera of choice," he said. "So they want to be able to print their own photos and do it fairly inexpensively." Bernhardt said the evolutionary products may well produce a strong season for electronics chains, but nothing beats that single, gotta-have-it item that may be missing this year. Such items not only boost revenue but spur sales of accessories and related products. "For instance, when, say, a toy is hot, then Wal-Mart and the others get incremental traffic driven by that," he said. "These people, once in the store, may buy CDs and DVDs, games for the GameBoys as well."
Brought to you by Guardian eCommerce.
Executives hope high gas prices, rather than denting spending, will take a toll elsewhere while consumers buy gadgets and home entertainment systems. Coupled with falling prices for flat-panel televisions and the usual crop of hot items surrounded by marketing buzz, that has some marketers making bold predictions. "You're seeing the perfect storm where everything is coming together for the best of the 25 seasons I've been in this business," said John Kelly, a senior vice president at Circuit City. Ken Bernhardt, a marketing professor at Georgia State University, is a bit less enthusiastic but agrees with the basic premise. "I think the very high gasoline prices, if they remain anywhere near these levels, may help consumer electronics," he said. "If people have less money to go out, and spend more time at home, they invest in an upgrade of their TV in particular."
Of course, that assumes consumers this year can make sense of the acronyms and options that confront television shoppers these days -- flat panel, flat screen, HDTV, digital, LCD, plasma, etc.
"There's a real potential for consumer confusion," Bernhardt said. "A lot of consumers that would like to buy one of these sets could become confused and just not buy."
Christian Roberts said he is willing to navigate TV technology to get a system that will let him be better entertained at home. "I drive a 2000 Dakota V8, and I get 17 miles to the gallon," he said. "Every time I pull in to get gas it's US$51. I'm shopping for a big-screen TV in the 55- to 61-inch range." Buyers at electronics chains already have made their major decisions on what to stock for the holidays, and they hope Roberts isn't alone in his desire to curl up next to a big-screen TV. For consumer electronics retailers, the holiday season is huge. It can be the difference between success and failure for the year. "The holidays up the ante in this business," said Mike Linton, the chief marketing officer at Best Buy.
The three-month period that includes the holidays accounts for much more than a quarter of a retailer's revenues. More than 30 percent of all consumer electronics spending occurs during that time, Bernhardt said. Flat-panel televisions have been beckoning consumers from store displays for more than five years. The fact that retailers think this will be a breakthrough year reflects a product mix that has become more evolutionary than revolutionary for 2005. It has been five years or so since the industry had a single must-have product, Linton said. That was the DVD player.
Refined or more affordable versions of flat-panel televisions, digital cameras, music players and video game consoles now are showing up high on annual gift lists. For example, iPod's Nano is simply a slimmed-down version of the popular music player from Apple. The buzz in game consoles this year is swirling around Microsoft's Xbox 360, an enhanced version of the original.
DVD recorders are now available for what a player once cost, and LCD computer monitors are now as cheap as tube monitors once were. Camcorders are moving toward direct-to-DVD or hard drive recording, while prices for miniDV tape models have fallen to the $250-to-$500 range.
But there is no single product that is expected to have the widespread draw that the DVD player once did. Instead, marketers are betting on general enthusiasm for digital products and consumers' desire to upgrade gadgets and computers they already own. "We are moving into the second phase of the digital revolution," said Best Buy's Linton. "There's a lot of customization. If you go back five or six years it was, 'Yeah, I have to get a laptop,' or a digital camera. What we are seeing now is that 'I'm going to add more choice and a lot more power to what I already have.'"
Linton also expects to see what he calls the "soccer mom" in his stores. "She will shop earlier and come in with a list," he said. "And since she's the family historian she'll be interested in products that work with the digital camera. There will be a big press on digital imaging." In fact, once you get past the consensus picks for the holidays, Kelly thinks printers made especially for printing photographs may be the dark-horse winners for the holiday season. "Now they have the digital camera, it's become the camera of choice," he said. "So they want to be able to print their own photos and do it fairly inexpensively." Bernhardt said the evolutionary products may well produce a strong season for electronics chains, but nothing beats that single, gotta-have-it item that may be missing this year. Such items not only boost revenue but spur sales of accessories and related products. "For instance, when, say, a toy is hot, then Wal-Mart and the others get incremental traffic driven by that," he said. "These people, once in the store, may buy CDs and DVDs, games for the GameBoys as well."
Brought to you by Guardian eCommerce.
