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A Midyear Look At Retail, From Top to Bottom

CES occurs every January but in the blink of an eye, here we are at midyear and wondering where the time went and how business at retail is going. Or where the sales volume is going, or how profitability is faring, etc.

For most of my career as editor-in-chief of TWICE, the halfway point in the year was when the publication began to compile its “Top 100” retailer sales volume lists – and in the case of my previous job as editor of the electronics section of the old HFD (Home Furnishings Daily) it was a “Top 200” retailer list for electronics.

That’s why I read with interest the recent “Top 100 CE Retailers” and “Top 50 Major Appliance Retailers” reports. The annual sales lists, based on calendar year 2017 volume, reported in both categories for public and private companies are considered to be accurate. And, for someone like me, who has followed retail in both industries for decades, this year’s results are both staggering and, in a couple of cases, not surprising.

The observation I made a few years ago has completely come to fruition if you look at the numbers. I wrote that the consumer electronics business now consists of two retail groups: CE retailers and the Amazon/Apple consortium. Amazon and Apple generated more than $43 billion of an estimated $139.6 billion of the total TWICE CE Top 100 sales volume last year and will probably do at least as much this year. Amazon – number two on the list to perennial number one Best Buy – had almost $10 billion more in annual CE sales than Walmart, which is an ongoing trend.

What’s not surprising to me is that Walmart continues to reinvent itself in CE. Due to its girth, Walmart is still a leader in CE retail sales. But despite the new merchandising plans, more in-store signage and addition of more CE categories, attempts to invigorate its website, Walmart still has to keep up with its competition in sales volume.

Meanwhile, the TWICE CE Top 100’s number one and number two retailers made a deal this spring. Best Buy agreed to sell 4K and HD Fire TVs in their stores this summer under the Toshiba and Best Buy Insignia brands. And as part of the deal, Best Buy is joining Amazon as a third-party seller. Best Buy has sold Amazon’s devices for years, but never when the online giant’s overall power with the consumer has been this overwhelming. We will soon see if this partnership works for both parties, or just Amazon.

Not surprising, Sears continues to fall off the competitive map in electronics (number 12 on TWICE’s CE Top 100 with $1.075 billion in sales, a 12.5 percent drop from 2016) and in major appliances (number four on TWICE’s Major Appliance Top 50 with $3 billion, a 19 percent sales decrease). Sears’s slow-motion demise accelerated this spring, as Eddie Lampert, chairman/CEO of Sears Holdings, offered to buy its iconic Kenmore appliance brand through his hedge fund of ESL Investments, as well as Sears’ real estate and home services division. And in its most recent quarter, Sears’ posted a net loss of $424 million, compared to a year ago profit of $245 million, a one-time respite from losses, due to the sale of its Craftsman tool brand.

Similar to a decade ago when Circuit City hit the skids, Sears’ demise is helping national competitors like Best Buy, Amazon and Walmart in electronics, and Home Depot and Lowe’s in appliances. But for those who are not familiar with the arcane world of electronics and appliance retailing – which are becoming more and more entwined today due to IoT and smart home technologies – those under-the-radar companies that can explain, sell, service and install next generation products are the real beneficiaries: independent retailers and custom installers. And these smaller resellers sell next generation products profitably.

The increased sales volume in CE and appliances for independents and installers is not just because of Sears’ challenges. Top regional retailers who are independents and others that are smaller operations that sell to consumers, continue to thrive because their operations continue to evolve, whether it is online and social media marketing efforts, in-store marketing and sales, or merchandising.

Given the current economic environment, sales of electronics and appliances should be strong for the balance of the year, for all types of retailers in the business, no matter their size.

Steve Smith was the former editor-in-chief of TWICE and a member of the CT Hall of Fame.

Steve Smith