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3 Predictions for Big-Box Retail in 2009
There aren't many reasons to expect 2009 to be a better year for retail than 2008.
No matter how you look at it, 2008 was a rough year for CE dealers, whether boutique companies or big-box stores.
Attention in the United States was focused on Circuit City's swan dive, as well as Tweeter's second bankruptcy.
Up north, iconic Western Canadian A&B Sound entered court ordered creditor protection for the second time in three years, likely closing their doors for good.
Even the winners in CE retail look pretty worse for wear. While Best Buy has weathered the storm so far, it's advising a much more tentative outlook on 2009.
So what can we reasonably expect to see happen in the retail CE space in 2009?
It's too early to say whether that includes independent dealers, regional, or even national chains. With the general economic prognostications varying from bad to worse, however, we'll likely see more well-known retailers close up shop before the year ends.
Retailers that have kept their heads above water are going to take a long, hard look at where they'll spend money. With commercial credit and consumer spending tightening, massive expansion is yesterday's strategy.
New stores are only going to be considered as replacements for less-viable locations. Expect retailers to scrutinize underperforming stores very carefully, with an eye to closing many of them.
Retailers that are hanging on are, to some degree, the ones that understood the importance of attachment selling and creating high-margin package sales.
Surely there's no one left on the bricks and mortar side who still thinks they can punt low-margin flat panels out the door and make it up on volume?
When Circuit City announced in 2007 that they would be concentrating on attachment sales, I criticized them for acting as if they'd invented fire when they should have been doing this all along.
If overall business is down, retailers will focus on capturing profitable sales: add-on selling, warranties, store brands and other higher-margin opportunities. I'd love to see a return to high-margin stereo and speaker sales in the big-box stores, but that's probably asking for a bit much.
It often gets worse before it gets better. I don't think we have many reasons to expect 2009 to be a better year for retail than 2008.
Lee Distad is a freelance CEDIA Certified Professional Designer who offers design and process consultation to firms in the Custom Installation industry, as well as copy writing and other professional writing services. Lee’s business and industry blog can be read at http://www.leedistad.com
Attention in the United States was focused on Circuit City's swan dive, as well as Tweeter's second bankruptcy.
Up north, iconic Western Canadian A&B Sound entered court ordered creditor protection for the second time in three years, likely closing their doors for good.
Even the winners in CE retail look pretty worse for wear. While Best Buy has weathered the storm so far, it's advising a much more tentative outlook on 2009.
So what can we reasonably expect to see happen in the retail CE space in 2009?
More Bankruptcies
It's too early to say whether that includes independent dealers, regional, or even national chains. With the general economic prognostications varying from bad to worse, however, we'll likely see more well-known retailers close up shop before the year ends.
Consolidation
Retailers that have kept their heads above water are going to take a long, hard look at where they'll spend money. With commercial credit and consumer spending tightening, massive expansion is yesterday's strategy.
New stores are only going to be considered as replacements for less-viable locations. Expect retailers to scrutinize underperforming stores very carefully, with an eye to closing many of them.
A Flight to Quality
Retailers that are hanging on are, to some degree, the ones that understood the importance of attachment selling and creating high-margin package sales.
Surely there's no one left on the bricks and mortar side who still thinks they can punt low-margin flat panels out the door and make it up on volume?
When Circuit City announced in 2007 that they would be concentrating on attachment sales, I criticized them for acting as if they'd invented fire when they should have been doing this all along.
If overall business is down, retailers will focus on capturing profitable sales: add-on selling, warranties, store brands and other higher-margin opportunities. I'd love to see a return to high-margin stereo and speaker sales in the big-box stores, but that's probably asking for a bit much.
It often gets worse before it gets better. I don't think we have many reasons to expect 2009 to be a better year for retail than 2008.
Lee Distad is a freelance CEDIA Certified Professional Designer who offers design and process consultation to firms in the Custom Installation industry, as well as copy writing and other professional writing services. Lee’s business and industry blog can be read at http://www.leedistad.com
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