Time for the first example of Great CE Leadership – that of Dick Schulze and his incredible transformation of Best Buy in the 1980s. Traditional CE Retail at that time was all about advertising “loss leaders” and then using a commissioned sales force to step customers up to something that was profitable for the retailer. Dick focused on where the customer was going (most retailers were keying on how they could make money and were not customer-centric), where consumers would not feel pressured, creating a model where it was a complete non-commissioned sales force (the blue shirts), all there to help the consumer choose what would be best for them. No pressure to sell off the “on ad” items – what a concept! Concept IV was born, with Dick and Brad Anderson turning the industry upside down (goodbye Circuit City – though it took a few years). And they realized that they needed to drive traffic – using media (CDs, movies and software) to do the trick. Dick and Brad recognized that traditional CE was dying – they needed other items to drive traffic and bring new and younger consumers into their stores – a message that most other CE Retailers never managed to convey. That’s leadership – going where the consumer is headed and not trying to live in the past. Leadership Post #2 – 03122018
Many non-work friends ask me why a certain retailer or vendor is failing or how they are going to compete in an Amazon world. I thought that I would take my 40 years in the Consumer Electronics industry and start a series on Leadership (why some companies prosper and others do not make it). My family kids me that I am a little bit like Forrest Gump, having met and worked with almost all of the industry titans of the last 40 years – the early leaders like Sidney Harman (Harman Kardon, JBL) Ray Gates (the leader in bringing Panasonic to the US) and Dr. Bose (Bose) to the leaders of the 1980s – Steve Jobs (Apple), Nolan Bushnell (Atari), Jack Tramiel (Commodore), Dick Schulze (Best Buy) to the leaders of today. We have consulted directly for more than 250 companies in the CE industry, and have worked with more than 1000 in total as partners, clients and friends – and from this, I hope that the stories that I will share will inspire and teach you as they have me. and please feel free to comment and to suggest names as this promises to be an ongoing series of posts on what leadership means in the world today. #1 in a series on leadership – 03112018
Lots of people have asked me what has stayed the same at CES over the last 45 years. The stuff that has changed is in a separate LinkedIn post. What has stayed the same: #1 – It is still about the products, even if the type of product has changed. The early shows saw the launch of video games, VCRs, home computers, projection TVs and much, much more. #2 – CES is and was about vendor parties. Every night a party – the only difference is that at my age I am in bed by the time they start! #3 – CES has always been, then and now, about building relationships between vendors and retailers. #4 – It has always been a show where people work 16 to 18 hours days – breakfast meetings, then work the show floor and offsite meetings and then dinner meetings. The is not a show for the weary (or out of shape). #5 – The highlight is seeing friends that you have not seen for a year … and seeing where they are working now. Our industry has always had lots of mobility – people keep coming back to CES, just with different companies on their badge. See you in Vegas!
Lots of people have asked me what has changed at CES over the last 45 years. The stuff that has stayed the same is in a separate post. What has changed, beyond moving from Chicago to Vegas: #1 – The show has changed from a buying show where retailers wrote Purchase Orders for immediate shipment (with vendors offering lots of Show Deals) to one focused on the products and overall technology, where retailers can see where technology and the industry is going. #2 – CES is now clearly a global event – in the 1970s it was almost strictly for the Americas. #3 – The press is now both global and mass, as opposed to a US CE press with a limited amount of mass media. This has meant much greater exposure for our industry – a very good thing! #4 – The show has became stratified. In the 70s any retailer could go in any both, with or without an appointment, and see the top executives. Today is it appointment driven, and the top execs are in meeting rooms almost the entire time, meeting with retailers and press. #5 – The type of products, as we have shifted from Consumer Electronics to Consumer Technology. The cars in the 70s were only in the car audio booths, showcasing the car audio look and feel, and sound. There were no appliances (except for a few random microwaves). See you in Vegas!
I have been attending CES for the last 45 year (yes, since 1973). And in that time I have seen the launch of VCRs, Digital TV, Video Games, Consumer PCs, streaming devices, IoT products and so much more. The best part of CES to me has always been the exchange of ideas, as I meet with retailers, vendors, distributors and others, and we talk about what we have seen and heard, and what we believe will happen in the next year.
We are telling our clients that the three key trends for the next 12 to 24 months are:
- Amazon, Amazon and Amazon (selling to Amazon, selling on FBA, leveraging reviews, variating, bundles and so much more)
- Home Automation and Control – not just carrying, merchandising and promoting Amazon and Google solutions, but how to leverage the sales of other devices through these platforms and how these products transform how we interact with Consumer Technology and live our lives
- Having your products available to consumers however they want to buy them, wherever they want to buy them from and in whatever configuration they want to buy/consumer them – guiding principle of our consulting practice for the last 30 years.
Happy New Year, and feel free to see me in our meeting rooms at South Hall, MP25370
Levin Consulting is honored to be included in the Indiegogo Resource Guide for start-ups. Find us listed in the section entitled, “Reach the Retailers”.
Often people ask me, “what exactly do you do?” “What kind of consulting, and in what fields?” My answer is the same as it has been for the last 29 years – that we work with consumer technology clients on the successful sell-through of their products. That can mean selling direct, through retail or online – wherever a consumer expects and wants to purchase that kind of product.
I was reminded of this when I looked at our internal travel schedule, covering the last couple of weeks and the next few coming up. Our team has met with, or is meeting with the following key accounts: Amazon, Costco, Best Buy, QVC, Best Buy Canada, Home Depot, Lowe’s, B&H, Toys ‘R’ Us, Dixons Carphone, Media Markt, InMotion, Zulily and many more! We travel the world on behalf of our clients.
There is a lot more that I can say about what we do to help make this happen – I will leave that for a future post. In the meantime, feel free to send me an email with any questions or comments.
PRG’s 2015 Hardware Symposium + BBQ
Product Realization Group (PRG) Symposium & BBQ in Sunnyvale, CA on Thursday, September 17 from 8:00 AM to 2:00 PM. Learn about the latest trends from industry experts, and meet like-minded professionals in an informal setting, while enjoying some delicious food and drink. We will also be featuring our Product Realization Roadmap. You will have the chance to gain valuable exposure to local high tech companies, service providers, and professional societies.
- Learn about how we are becoming more connected from our expert panel
- Meet PRG members and event sponsors in an informal setting
- Enjoy a delicious BBQ with PRG and Levin Consulting
Get 25% off when you register now: http://bit.ly/1Ut95e8
Best Buy and Walmart, to name a few, offer the store-within-a-store concept to give customers a dedicated offering of branded products. Best Buy is taking that one step further. This week, Macy’s announced that they are testing testing Best Buy CE Shops within Macy’s that will be staffed by Best Buy sales associates. This initiative is to spur growth and we see this as a win for both retailers.
Macy’s gets the advantage of bringing in added traffic, with the positive exposure of name brand products (they are the ultimate name brand store). Best Buy gets incremental volume, and more importantly, can show its key vendor partners the advantages of partnering with Best Buy extend beyond the Store within a Store shops at Best Buy to other high traffic outlets that enhance the image of the products (as Macy’s is considered a quality partner for higher quality brands).
We see this as an opportunity for Best Buy to increase their attempts at having exclusive offerings, at differentiating from amazon and as a step toward increasing their footprint without the risk of the additional real estate. This could well turn into a program like the Dixon’s store within Harrod’s – a very high volume and profitable partnership for both retailers. (click here to read article)
#1 – Overall consumer spending has increased, even with wage stagflation. This is due to the combination of increased disposable income with the rapid decline in gas prices (an extra $10 to $20 per week makes a big difference) coupled with greater consumer confidence (even without wage increases, the feeling that the economy has at least stabilized coupled with the cut in gas costs) has led to greater spending. The other macro factor that has often been overlooked is the multi-year lows in interest rates, allowing many homeowners to refinance their mortgages and cut down their monthly expense. So without any wage increases, consumers have more money in their pockets!
#2 – The Holiday season seems to have started slowly … except for Consumer Electronics. Overall holiday spending looks to be up 2 to 4%, while CE spending looks like it will end out up 7 to 10%. Two key factors for this are the explosion in TV sales this season, dominated by large screen sets (55 inch and above) and Ultra High Def sets, and the fact that so many CE categories are positioned for a great season (sound bars and home theater audio, portable audio and headphones, tablets and smartphones, health and wellness CE products, action cameras, notebooks and video game systems). That there are some many hot CE categories has meant that CE stores traffic has been solid for the year – not spectacular, as overall retail traffic continues to lessen as consumers increase their share of online shopping.
#3 – This is clearly the year that we have seen a tipping point in how consumers shop, with their first search being online (as opposed to checking out stuff in stores), online shopping taking greater share and omni-channel becoming more important. This is a long term trend, one that we see moving at a more rapid speed over the next few years. This growth has not been shared by all accounts online – it is focused on the very large players (for CE online, think amazon.com, walmart.com, newegg.com and bestbuy.com). The numbers for the last ten days online are incredible, with both page views and actual revenue up in the high double digits.
#4 – The positives in the CE industry are not shared by all players or all categories. Sears/Kmart continue to see double digit declines in overall CE revenue, as do the office superstores. The camera and camcorder categories are in a repaid decline, with no hope of a recovery. Smartphones continue to take a bigger share of the overall CE business – meaning other categories are hurting. And Apple continues to increase its share of the overall CE business; alone it is responsible for roughly half of the growth in CE. And the growth in Apple and smartphones are negatives in terms of margin, as both are low margin players – and the overall CE industry looks to be down between 100 and 200 basis points this year.
#5 – One additional positive note regarding the economy is job growth over the last three months, with a gain of 840,000 jobs in the US during that time. This has a double impact: those who have jobs now have spending money (impacting about 1.2 to 1.6 million people, based on families) and increased overall consumer confidence, as people see their family members and friends getting jobs and feel better about the overall economy. This is why we believe that the spending for apparel, sporting goods, housewares and toys will pick up as the season goes on, just not to the extent of CE products.
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