This holiday season, consumer electronics products will once again be the featured gift category for every imaginable retailer. Just as last season, prominent Black Friday advertisements, center aisle displays, and end caps will feature all manner of electronics products. Besides electronics stores themselves, department stores, warehouse clubs, drug stores, and even some auto parts, home improvement, outdoor, and grocery chains will try to get their share. The 16th Annual CD Holiday Purchase Pattern Study conducted by the Consumer Electronics Association (CEA), the industry group representing electronics manufacturers and retailers, forecasts that consumers will spend an average of $222 on electronics products, up 8% from last year.
The desire to get in on one of the few (and maybe only) current growth segments is understandable. However, to capitalize on the consumer love of electronics items as favorite gifts, retailers whose primary focus isn’t on electronics must first be aware of the four attributes that make consumer electronics products great features during the holiday season:
1. The fresh factor
The consumer electronics category is constantly changing, marked by both continual innovation and correspondingly short lifecycles. Consequently, the category repeatedly produces “must have” new products with attention-grabbing new features, just in time for each holiday season.
This “fresh factor,” however, extends well beyond those high-demand items and influences consumer demand for other electronics products as well. The spillover from all these items further increases the focus on similar or complementary products, as well as other items made by the same company.
For example, the iPhone, one of this year’s top 10 most-demanded items (according to the CEA study), will have a fresh-factor influence on other Apple products and accessories, as well as other MP3 players and smart phones.
Retailers can merchandize the fresh factor by featuring products that are complementary to this year’s must-haves. The strategy here is to feature the add-ons and accessories that can be given as stocking stuffers along with the must-have, e.g., the headphones or docking station for the iPod rather than just the iPod.
Often, these products have better margin and require less commitment. Having store associates who have been trained to sell the add-ons, moreover, makes an even more marked difference in the sales results.2. The right demographic
Another reason the consumer electronics category draws customers into the store is its broad appeal to many age groups, particularly to teens. According to the CEA study, both adults and teens list multiple consumer electronics products in their lists of the top 10 most wanted gifts.
Teens, however, have a particular appeal since 81% of them expect to advise friends and family members on electronic gift selection. Since teens recommend the items their parents purchase for themselves and others, they are most likely, also, to recommend a particular retailer as a destination for holiday shopping.
Finally, because gift cards/certificates appear this year among the top 10 items on the teenager’s wish list, merchandising gift cards alongside electronics products, particularly games and gaming systems, would be a strategic move for retailers hoping to provide the adult shopper with a another solution for the teens on their gift list.
3. Brand power
Among the top 50 Global Brands in BusinessWeek’s most powerful brands in 2009, 17 sell products that may be given as gifts. Eleven of these are in the consumer electronics category, including three of the top five. Undoubtedly, the brand names in the electronics category are a draw to shoppers and a leverage resource for retailers. During difficult economic times, strong brands appeal to consumers even more.
The current price pressure on all manufactured goods simply leads the value-seeking shopper to focus on brands. Similarly, the advertising volume CE companies invest in during the
holidays further strengthens brand names in the consumer electronics category.
The spillover from such extensive advertising can be extremely beneficial to the retailer, even beyond the featured electronics products. In the end, associating the retail store with positive brand power leverages all of the advertising and suggestions of quality that an electronics brand represents for a holiday shopper.
4. Price point
Consumer electronics includes products in a broad price range, many falling within the typical gift-giving range. Even within single families of electronics products, such as digital cameras or MP3 players, quality products range in price from $40 to over $300. The wealth of options benefits consumers, but also leads to complications for merchants.
The CEA study found that product assortment was less important to shoppers than price, ease of purchase, shopping experience, and availability. Consequently, retailers should only offer products in the price range that will appeal to their typical shoppers from among brands the shoppers will recognize.
Opportunities and pitfalls
Featuring consumer electronics during the holiday season can be profitable. It can potentially boost the sales of both featured and other products and enhance the store’s perception in the eyes of consumers.These opportunities, while attractive, do not come without perils. To capitalize on the former and minimize the latter, retailers should follow three tactics that are closely related to the four attributes just discussed.
First: Don’t simply blindly follow the trends; merchandise specifically for your customers. While it may be tempting to carry electronics because they are hot holiday items, view your selection from the perspective of your customer and ask:
- Will seeing this product merchandised in the store make sense to our customers?
- Is this something a typical shopper in this store will buy as a gift?
Sales to a store’s typical customers can further be ensured by careful merchandizing. For example, MP3 players may not make sense in a sporting goods store, but if they are merchandized beside workout gear, the placement can provide context for the shopper and reinforce the core products carried in the store.
Second: Check your store’s policies against those of the consumer electronics competition. Store policies, return policies in particular, are very important to consumer electronics shoppers. In fact, the return policy ranked fifth in importance for all consumers in the CEA study and second in the all-important Gen Y demographic.
Consequently, it would be safe to say that not having store policies in alignment with those of competitors can undermine the entire effort. Even giants like Walmart and Target have made policy adjustments to be more competitive.
Third: Prepare store associates. Consumer electronics shoppers have materially higher expectations of store associates than do shoppers in other categories. Customers generally expect store associates to be able to describe the product and its features and provide compatibility requirements.
When the price point exceeds $100, however, the expectations go up dramatically. In such cases, shoppers expect a completely consultative sales experience in which an associate can interview the customers and make personalized recommendations about the gift. For such shoppers, associates are expected to provide competent assurance that the product is right for the gift recipient and offer complete solutions.
With these tactics in mind, featuring consumer electronics during the holiday season can be a richly rewarding business for retailers in any category. While specialty retailers can provide selection and a concentration of brands, any retailer can provide targeted electronic products that are right for their typical shoppers and leverage the popularity, growth, and cache of consumer electronics.
Robert A. Richardson is CEO of Associates Interactive, a customer experience and associate performance consulting and training company based in Buffalo, NY. Associates Interactive creates training programs for retailers and product manufacturers that improve sales performance by fostering better interaction between store associates and consumers.
