Consumer Electronics & Appliances Retail Industry Trends

Transition to Digital Technology

Digital technology has revolutionized almost every segment of the electronic products industry and continues to drive the pace of new product introductions. Manufacturers have leveraged digital technology to improve picture and sound quality of products like TVs, cameras, and audio devices. Advances in digital technology are shortening product life cycles and increasing product proliferation.

Expanding Use of Electronic Media

More consumers are spending time surfing the Internet, playing video games, and listening to music using electronic devices. In 2005, one-third of adults spent more than ten hours a week playing electronic games – more than teens, according to the Consumer Electronics Association (CEA). Falling prices and more user-friendly products have made consumer electronics more accessible to the average consumer.

Growth of Wireless Segment

Expanding wireless networks provide wide-ranging access to the Internet and phone networks. Consumers and businesses are becoming more accustomed to communicating and accessing information without being tied to a physical location. The functionality of wireless devices is improving, as advances in technology allow more complicated tasks, such as capturing and transmitting voice, data, and video. In 2005, the installed base for cell phones exceeded 180 million units, with an average of more than two wireless handsets per owner household, according to the CEA.

Expansion of Superstores

Strong growth in the industry has fueled the expansion of electronics superstores. Since 2001, Best Buy has opened 60 new stores each year. Fry’s Electronics, a regional superstore chain, has expanded into the Midwest and Southeast. With wide selections, competitive pricing, and frequent promotions, superstores force independent retailers to compete on different (and sometimes more expensive) dimensions, like customer service.

Growth through Acquisitions

Large retailers continue to acquire companies to be able to serve new markets and new demographics. Circuit City bought InterTAN to establish a retail presence in Canada; Best Buy bought Magnolia Audio Video, an upscale retailer for high-end electronic products.