Accessories or essentials?

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It’s often easy to think of past eras as “the golden days” and to forget that in reality everything was not actually as rosy as it seemed. But for many retailers of TVs and AV-related equipment, the streets really did seem to be paved with gold in the early half of the 1990s.
If you can’t comprehend this scenario against the backdrop of current market conditions, consider for a moment that back in the early/mid-1990s a basic Sharp mono VCR with no bells and whistles listed at well over £200, while a standard Toshiba 29in CRT television cost more than twice as much as that (both still going strong in this household without ever having missed a beat, by the way – the chances of that £29.95 DVD player lasting until 2020 must be relatively slim).

Even then, however, accessories were seen by the canny retailer as a decent add-on that could add significant margin to a sale. But where does that leave them now, and what new sales possibilities have the latest technologies opened up?

HDTV revolution

According to Ralph Allen, managing director and chief designer at Techlink (rebranded earlier this year from Tech+Link), new technologies – and particularly HDTV – have had a profoundly positive impact on the accessories sector: “The HDTV revolution has put the TV back as the centrepiece of the living room, and this has sired a fabulous market in design-led AV furniture,” he says. Having said that, though, he does caution that this year the AV furniture market has polarised into utility, price-led models at one end of the market and sumptuous design-led furniture at the other.

He also highlights the huge growth in HDMI as a result of the TVs equipped with this feature: “This is excellent news for retailers willing to maximise accessory sales in itself, but there is also a logical trade-up route for better-quality cables and a host of ‘add-on sale’ accessories such as couplers, adapters and switch boxes,” he says.

Again on the technical side, digital storage technology has also had its impact, noted by Panasonic’s Lee Wootton: “Both optical media and SD memory cards allow increased networking between all your favourite devices. For example, you can record high-definition imagery on our compatible camcorder and play back by SD card or DVD optical media through our TVs and Blu-ray players that include an SD card slot,” he says.

At another AV furniture specialist, Alphason, sales and marketing director Paul Dawes says that HDTV is generally reckoned to be the best thing to happen to TV broadcasting since the introduction of colour: “Most consumers will need to upgrade their TV in order to view it, and they will need a reasonably large flat panel to get the full impact. To the switched-on retailer it offers a double-whammy sale. The consumer buys a beautifully designed and styled flat panel screen TV, and to get the most out of it, they need to display it on an equally modern and stylish support. Anything less is not doing the consumer, the set or the retailer justice.”

Probably most bullish of all is Steve Reichert of Armour Home, for whom continuing development is the lifeblood of the accessories sector: “New products bring new opportunities – it’s as simple as that. The more components there are in a system, the more cables will be needed to connect them, and every ‘black box’ has to stand on something. Of course, the accessory market develops and changes like any other market, and manufacturers have to have the right products at the right time. Frankly, it’s a wonderful time to be selling accessories.”

In contrast, Brian Koperski, sales support manager for Omnimount, sees less of an impact on the AV furniture market by HDTV, but agrees it has allowed for different designs, colours and features: “HDTV has created a ‘wow’ factor in terms of the image quality, and now the consumers want to show that off on equally fashionable furniture and mounting solutions,” he observes.

Meanwhile Optimum managing director John Ogden predicts that over the next 12 months, the AV furniture market will continue to diversify and move on from today’s popular glass and metal designs. In his view, manufacturers will incorporate more wood and glass models, to offer consumers a different and wider choice.

The decline and fall of margins

With the staggering decline over the past 15 years or so in both the real and relative prices of AV equipment alluded to above, it’s not hard to see why retailers would want to try to major on a product line that does make it worth their while getting out of bed for. So does it really pay to put strong focus on the add-ons that are accessories, or should retailers still be putting major effort into the big-ticket products?

‘Both’, would appear to be the answer for some. As Ralph Allen of Techlink readily points out: “Independent retailers often make more margin on the sale of accessories to go with a ‘big ticket’ TV purchase than on the TV sale itself. So once you have concentrated on closing a big ticket sale, that is the time to spend a few minutes maximising your accessory offering. Does the customer need an HDMI cable, or perhaps a longer and/or better quality HDMI cable for their new TV? Have they a number of HDMI sources and perhaps need a switchbox? Will the new TV go on the wall or on a stand – and do they require a bracket or furniture item? The possibilities to make an added-value accessory sale on the back of a big ticket item are huge, and if more high-street shops pro-actively sold-in accessories, then the high street really would be paved with gold.”

Taking up this theme, Armour Home’s Steve Reichert underlines the importance of retailers using their skill and knowledge of accessories to help their customers enjoy owning a product that would otherwise be differentiated on price alone: “They can make the ‘me-too’ product deliver better sound, better picture, be more convenient to use and look better in their customer’s home. Good accessories can do magic. They make customers happy to pay more because they get greater pleasure from their purchases.”

And he further drives home his point by even admonishing us for using the wrong terminology: “It’s about time we stopped calling them ‘accessories’. They should really be referred to as ‘essentials’,” he believes.

Paul Dawes of Alphason is obviously a keen proponent of using TVs and furniture in partnership with each other to maximise a retailer’s return on a sale: “In the case of AV furniture, the profit margin on the support can very often be three times as much as that offered by the hardware it supports. So selling AV furniture is a key part of a retailer’s business. Retailers are realising too that by displaying TVs on top of stands, they run the risk of making a double sale.”

In an effort to raise the profile of lucrative accessories sales, AV brackets manufacturer Sanus Systems (distributed in the UK by Alphason) has launched an initiative called The Knowledge College, a web-based interactive classroom offering comprehensive training on the Sanus range of products designed to help salespeople select the correct product for their customers. “Flat panel TV mounts are growing in popularity, with one in every three now being mounted. Many consumers are uncertain about which product to buy and the Knowledge College will empower salespeople to ensure they select the right product,” says Paul Dawes.

In the view of Optimum’s John Ogden, retailers must stock more profitable accessories in order just to survive: “Overall, it’s essential for retailers to have AV furniture on show in order to reap the massive margins on offer. It demonstrates to customers how great equipment can look when displayed on a piece of stylish purpose-designed AV furniture and helps secure a profitable add-on sale.”

Christmas trimmings…

With yet another Christmas upon us, IER asked accessories manufacturers to indulge in some crystal-ball-gazing and tell us which products were going to be surefire winners this Christmas.

For Steve Reichert of Armour Home, HDMI cables will definitely be top of the list: “Our dealers sell many thousands of high-quality HDMI cables every month,” he says. “They are an easy sell, return a high margin, and never come back – which is about the closest any of us will ever get to a description of a ‘perfect’ product.”

Techlink’s Ralph Allen also homes in on the attraction of HDMI – particularly switching products: “Let’s face it, well over 5 million HDTVs are in circulation in the UK, and most have only a single HDMI input,” he says. “The sheer number of Sky HD systems, PlayStation 3s, Xbox 360s, Blu-Ray players and HD DVD players that will be unwrapped this Christmas will create a major HDMI input shortage for most consumers.”

Interestingly, OmniMount’s Matt Towland points out that although flat panel screens will again be huge this Christmas, this has in itself changed the AV furniture design ethos. “Furniture designed specifically for larger-format wider flat panels requires an entirely different profile from that which would be designed around the CRT platform,” he says. “Consequently, the furniture is becoming wider and less deep as well as more emphasis being placed on the aesthetics to help complement the sleek contemporary lines of the screens they are supporting. The reduced weight of the screens also means that new features such as height adjustment, pan and tilt can be introduced to add further benefits to purchasing AV furniture specifically designed for the purpose.”

And talking of Christmas, it’s impossible to ignore the perennial favourite of batteries. How many people have been caught out on Christmas Day with a brand new toy or gadget that needs two or four AA batteries – which, of course, you didn’t think to get? With this in mind, batteries should be at the forefront of every dealer’s mind, as the total UK battery market is worth around £320 million, according to IRI/GfK figures.

Sarah Richardson, Energizer marketing manager, says: “Gadgets are the lifestyle accessories that are driving UK battery sales. Digital cameras, MP3 players and hand-held games consoles are the consumer must-haves. This means shoppers are engaging with the battery category like never before.” December sees the start of two-month, £2m television advertising campaign for Energizer batteries. With the strapline ‘It’s what’s inside that counts” the advert will drive home the message that whatever the must-have gadget is, Energizer Ultimate Lithium is the must-have battery.

Duracell is running a 4+4 Christmas promotion for this year in which consumers will receive four free cells when purchasing special packs of AA and AAA Duracell Plus and Duracell Ultra M3. Free cell offers in the lead-up to Christmas 2006 boosted battery sales by 69%, the company says.

If ever there were a case for stocking carefully selected accessories in the run-up to Christmas at least, this is it.

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