Thursday, March 24, 2011

Retail Remedy's

If you are new to retail, then you better listen up.

There are what my Dad called merchants holidays that you need to plan for every year.

We've already passed Valentines Day, Easter and Mother's Day are just around the corner, but you still have time to plan for Father's Day and Graduations.

CE Dealers Prepare for 'Dads and Grads' Sales Events

After a long, hard winter across the country, consumers will be moving into the mid-year months looking to shake their cabin fever and to loosen up their purse strings. Consumer electronics retailers, along with the distributors and buying groups that serve them, believe the "Dads and Grads" buying season, which extends for nearly seven weeks from early May through Fathers' Day, will be one target of that pent-up desire to spend.

Both online and brick-and-mortar dealers see this period as nearly as important a retail event as the Christmas sales season. More important, though, is that the dads and grads season brings with it bigger profit margins than Black Friday and extended holiday sales. "Margins tend to hold pretty steady for this event," said Jeff Davis, senior vice president of sales for D&H Distributing.

Even though price promotion is part and parcel of the dads-and-grads selling landscape, it's nothing on the level of a Black Friday, retailers said.

"At year's end, many manufacturers are offering discounts on their products as they prepare to stop production on the older products. They usually reveal the next year's lineup at CES in January," said Bernard Luthi, vice president of marketing, web management and customer service for Newegg. "By the time Fathers' Day and graduations come around, we are selling brand-new items that have just hit the market."

Another big difference is that the dads and grads sales period is based on specific products that are aimed at a particular audience. That allows retailers to promote higher-margin items without having to slash prices.

"The intensity of promotion, amount of lowball pricing and discounting for the period doesn't come close to what's seen during Q4 for year-end holiday buying," said Bill Stewart, president and CEO of Petra Industries.

Petra's marketing efforts in promoting dads and grads products to its dealer base begin about six weeks prior to the season. Some of the categories Petra focuses for Fathers' Day are cellular, computers, home theater, metal detectors, fish finders, optics, photo, video, GPS and tools. For grads, the distributor focuses on accessories for iPad, iPhone, iPod, laptops, tablets, e-readers and gaming, as well as headphones and photo/video. Industry insiders predict that this dads-and-grads season will be healthy for retailers. The main focus, said D&H's Davis, will be on mobile products, a category that's been hot with the targeted demographic. "A smartphone, a new notebook, MP3 player, or anything that allows you to access content," he said, adding that tablets will be a white-hot commodity.

"There will be a real clamoring for tablet consumption. There will still be a netbook category, but manufacturers seem to have pulled back a bit from it so they're kind of hard to get now, and when we get them, they go right back out. What we'll find is that will be at the lower end ($199 to $249) and tablets will pick up at a little higher price range -- ($399 to $599) and notebooks will come in above that.

Retailers also predict strong E-reader sales and, for those that carry a broader assortment of goods, on non-electronics associated with summertime activities like grilling, travel and outdoors recreation.

Despite a decrease in sales, TVs will also play a role in dads-and-grads sales. Sharp declines in pricing will enable specialty retailers like Audiotronics in Roanoke, Va., to promote sets in the 22-to-42-inch range at prices from $250 to $300. Specials like that get plenty of feet through the doors.

"Last year, we were pretty successful with a 32-inch with an iPod dock on it," said Matt Hartberger, Audiotronics' corporate vice president, adding that he expects earbuds, headphones, computer speakers and portable navigation to also do well. "That seemed to hit a hot spot."

Audiotronics also capitalizes on strong car stereo sales mid-year. Tastes, though, have shifted from the big-boom systems to connectivity solutions for iPods, iPhones and other products that allow for hands-free operation. Not only does Audiotronics make original product sales, it adds margin-rich installation services.

"What happens is that moms and dads come in looking, and if they elect to buy, we find out the car they have and sell them the proper equipment and the installation, and they make the install appointment right before or after graduation," Hartberger said.

Adiotronics also expands its promotions beyond the confines of its stores, setting up booths at car, boat and motorcycle shows. Those generate as much interest for home theater for car stereo and mobile electronics. "People say, 'I never knew you did that.' It helps get us in the public eye on a face-to-face basis and tell our story," he said.

Audiotronics will also be starting a TV campaign that focuses on solutions and experience instead of price. As part of the dads-and-grads and summer sales events, car stereo and portables will be featured in the style of commercials where people are paired through a checklist of personality traits. "It will basically be a way of matching products and needs with a salesperson in our stores," Hartberger said.

Like other savvy retailers, Audiotronics promotes its events with email blasts and social media. "We'll put up a YouTube video that's tied to Facebook, and we can easily get a thousand hits on something really neat, like a Bluetooth kit that allows people to do everything in a car by voice," Hartberger said. "That gets the interest level up, and then when they get into the store, you give them the full story. We have over 2,000 followers already, which is great for a community our size."

This season, dealers will rely more heavily on social media than they did throughout 2010. "Some of the most effective retail/e-tail tactics we have seen have been private sales and exclusive discounts for 'following' or 'liking' a business, sneak peeks into upcoming sales, content downloads and giveaways," said Petra's Stewart.

Newegg's Luthi said social media is a crucial part of the company's outreach, citing in-depth user reviews posted by a knowledgeable customer base as a major benefit.

"Our Twitter and Facebook followers are often the first to see some of the best deals we have to offer," he said. "Our community creates detailed guides on how to do almost anything with the products available on Newegg, from building an affordable computer to converting your home to solar power."

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