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Retailers Must Adapt in Changing Tech Market

In the consumer technology business, the new year begins right after Super Bowl Sunday with a strong surge of big screen TV sales. In fact, January is traditionally one of the biggest sales months of the year, ranking up there with November and December.

By all reports holiday sales were robust, and recent gyrations of the stock market aside, retail sales in the U.S. are predicted to be strong during 2018 due to an overall good economy and upbeat consumer confidence.

During CES 2018, CTA predicted sales of electronics to increase 3.9 percent to $351 billion, with unit volume going up 6.6 percent, based on high demand for smart speakers, smart home and VR products, drones, and wearables. CTA’s 2018 U.S. Consumer Technology Sales and Forecasts Report included streaming services that deliver on-demand or linear video content for the first time. Excluding the addition of streaming services, total industry revenue should increase by a healthy 2.2 percent this year.

And the National Retail Federation (NRF) issued its annual prediction earlier this month saying that retail sales will increase between 3.8 to 4.4 percent during 2018. But which retailers will benefit from this sales increase? According to the NRF, online retailers and other direct sellers can expect to see sales increase 10 to 12 percent this year.

Due to Amazon’s tremendously successful holiday sales combined with January headlines about roughly 100 Sears and Kmart locations closing, 184 Toys “R” Us storefronts shutting down, and other chains not performing well, one might think that mall stores and brick-and-mortar retailers are marked for extinction.

The truth is more complicated. The great success that Amazon continues to enjoy is based on an efficient business model, world-class execution and tremendous consumer satisfaction. The recent closings of Sears, Kmart and Toys “R” Us locations can be blamed on failing to change their business models, a lack of execution at retail and eroding consumer satisfaction.

The fact is that any successful retailer whose core business is still in the brick-and-mortar format, selling electronics must also have a vibrant online sales operation, and an equally dynamic social media presence to attract and keep customers.

Still, many consumers will want to learn about certain products first-hand. Smart speakers, smart home products, VR headsets, drones, wearables, 4K TVS, automotive electronics, smartphones, tablets and laptops still bring in crowds for people looking to test them out.

That’s why Amazon has used pop-up stores to showcase its wares the past couple of years. And that is also why regional electronics and electronics appliance retailers continue to survive and thrive in this changing retail marketplace.

During a New Jersey TV news report I watched a couple of weeks ago on the closure of a JC Penny at the Paramus Mall, a young woman was asked whether she would be shopping more online in the future. She said she will still shop online but added that by “Going to the mall, or going to a store, you see and feel the products. And it is a social event too.”

That’s the challenge for electronics retailers who have brick-and-mortar stores. They need to make their locations more consumer friendly and interesting to inform and entertain customers, as well as sell products.

February is the time of year where even frenzied consumer technology retailers catch their collective breath, look back at what sold and what didn’t, and decide what changes they will make in their merchandising, marketing and sales strategies. For regional retailers, many will be attending their buying group meetings, such as the ProSource and Nationwide Marketing Group events held late February and early March.

I’ll be attending the Nationwide Marketing Group meeting and catching up with ProSource and it will be interesting to hear how they are once again adapting to the new retail dynamic in the consumer technology industry.

Steve Smith is a contributing editor of i3, was the longtime editor in chief of TWICE.

Steve Smith