Accessorise to survive

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If a week is a long time in politics, then ten years is certainly an age in consumer electronics. It’s hard to believe it, but only a decade ago the first MP3 players were just appearing over the horizon (Apple’s iPod was still three years away), digital still cameras were a brand new phenomenon, VCRs were still selling in large numbers, and high-definition television for the masses was a distant dream.
Today the selection is vast: mobile phones and MP3 players (both with extensive customisation options for covers), HDMI cables, SD cards and multi-gigabyte USB sticks, printer cartridges, satnav systems, high-capacity rechargeable batteries for digital cameras – the list goes on. One thing, however, has remained the same: the indispensability of accessories to big-ticket items. In fact, if anything, accessories are an even more vital part of a sale than they used to be.
Dynamic evolution
As Armour Home’s PR manager Steve Reichert says: “Accessory sales never stand still. They are truly dynamic in the sense that they are ever evolving. As the consumer’s main objects of desire change, so do the accessories that ‘attach’ to those main products. The market is genuinely ‘Darwinian’ – old accessories die out and new accessories spring up to take their place.”
In fact, industry developments can really galvanise sectors that were previously unimportant in many people’s eyes – a theme taken up by Optimum’s John Ogden: “The HD revolution has definitely excited the AV furniture marketplace,” he says. “Consumers that are prepared to spend a great deal of money on the latest HD components are often looking to invest an equal amount in stunning furniture, to give their AV package the ultimate wow factor.”
Homespares’ John Darley acknowledges the dynamic nature of consumer electronics markets, but points out that however sophisticated products become, they are always going to need add-ons to make them function to their full potential or at the highest quality: “Sure the dynamics of the major appliance markets are changing rapidly, but in these highly competitive mass-market areas, such as the development of LCD TV and HDTV, they will always need to be supported by a widely available range of accessories from docking stations and connectors through to simple cable tidy solutions – but getting the provision of these accessories right to match current market demands and trends is the key.”
For Philips Accessories’ consumer marketing director Nigel Grayston, more consumer electronics products simply means more opportunities for accessories retailers, explaining: “The arrival of digital TV and, more recently, HDTV tends to mean the addition of another box in the living room, which in turn creates the demand for accessories such as universal remote controls. Consumers are also looking to improve the quality of their equipment connections.”
He also highlights the potential offered by portable products in the form of improved listening quality and better power options. “The increase in popularity of all types of portable products has led to huge demand for replacement high-quality headphones and innovative power solutions. Consumers generally look to trade up and replace their original in-box headphones, and are looking to enhance their portable audio experience with higher-specced products or ones more specifically suited to their lifestyles.”
According to Alphason’s Chris Emerson, it is actually the duty of retailers to maximise consumer value, but he feels they do not always help their cause: “Ensuring consumers get the best out of their new TV is the responsibility and opportunity that every retailer must take on,” he says. “However, I believe many dealers present a confused and inconsistent message across a disparate range of accessories.”
Steve Reichert of Armour Home strongly believes that if a retailer doesn’t add value by attaching accessories and/or services to each sale, then by definition he or she is competing solely on price and the cheapest seller in the market will make the sale. “To be frank, that path leads to both financial madness and bankruptcy,” he says.
It would be hard to find a better example of selling improved customer enjoyment than one we saw very recently in a London electrical retailer. Two identical LCD TVs were showing the same DVD movie side by side – except one was connected with HDMI leads and the other with standard composite. The difference in picture quality was astonishing, with colours brighter and definition far better with HDMI.
Anti-recessionary measures
If changing technologies have had a significant effect on the accessories market, then so too has the sudden slump in the UK economy. It didn’t need a macro-economist to see a downturn had to come at some point – even if anyone who forecast it was labeled a doomsayer – but the speed and severity have come as an unwelcome reminder to the retail sector that all good things come to an end.
Techlink International MD Ralph Allen acknowledges that 2008 has already seen a slowdown in the accessories market, but points to the fact that this will also be the first year in which LCD TV volumes will have posted a decline: “As many accessories are bought at point of sale, there is inevitably less opportunity for an attachment sale,” he says. “However, this has fuelled many retailers into really driving accessory sales to keep up the average sale value. Selling just another cable or ‘pole and glass shelves’ stand isn’t likely to keep the wolf from the door, so many retailers are pushing designer furniture and higher-end cables.”
Optimum’s John Ogden is in no doubt about the effect the economic downturn is having on the electrical retail market, but cites this as a strong reason for focusing on ‘highly profitable’ accessories sales as margins on items such as TVs continue to decrease: “Selling entry-level products in volume in the current marketplace is very difficult,” he says. “The key is to sell fewer products but at higher prices to make more profit.”
Steve Reichert at Armour more optimistically observes that accessory sales have tended to outperform the general market during downturns in the economy: “My empirical evidence, from nearly 20 years in retailing, is that there are two reasons for this,” he says. “Firstly, because sales staff serve fewer customers, they have more time and are also more acutely aware of the need to maximise each sale. They simply try harder to sell accessories. Secondly, when money is tight and everyone is economising, consumers still like to window-shop and browse in stores to ‘cheer themselves up’ by looking at the products they will buy when times get better.”
Likewise, Philips’ Nigel Grayston isn’t terminally depressed about the outlook for the accessories sector either. “We would suggest that accessories would remain one of the more successful categories, as they offer consumers the opportunity to upgrade their home-entertainment experience – whether they are buying to improve an existing product or a newly purchased item.”
Essential accessories?
While accessories can sometimes be seen as ‘small fry’ and not worth the bother compared with the apparently more glamorous products they complement, some manufacturers actually feel the reverse is true. As Techlink’s Ralph Allen points out, while the price ticket and margins on like-for-like brand-name TVs has more than halved over the past three years, the average brand-name AV furniture sale is still over £200 – only £30-50 less than it was three years ago. “The old adage that there is more money to be made from the icing than the cake is even truer today,” he says.
There’s one problem though. Comments from some quarters suggest that consumers can be nearly as suspicious of accessories being offered in a sale as they are of extended warranties, but a number of manufacturers contributing to this feature feel strongly that if this is the case, it’s because they aren’t being sold correctly.
Typical is Alphason’s Chris Emerson: “Particularly in today’s climate, consumers are wary of any unnecessary expenditure. Suspicion only occurs when the accessories are not relevant or the benefits are not clearly explained. If accessories – or warranties, for that matter – are sold as an afterthought, then they will always be viewed with suspicion.”
Vivanco’s Paul Davey agrees: “If a retailer tries to add accessories at the very end of a hardware sale, then you can understand why consumers would relate this to extended warranties. If, however, the salesman asks simple questions like ‘Would you like to wall mount your TV?’ towards the very beginning of the sale or shows the difference in the quality of a cable against a standard in-the-box cable, then this should not be the case.”
Opportunities in AV furniture
One accessory item that probably avoids any feeling on the customer’s part that they are being sold something unnecessary is AV furniture – after all, if you’ve just spent into four figures on a large-screen LCD TV, you’re not going to want to perch it on a non-matching £25 plastic-wood veneered flat-pack from a DIY store.
As Techlink’s Ralph Allen underlines, AV furniture items are bought on their cosmetic appeal as much as on their practicality: “Often a consumer may go out shopping for a TV assuming they will use their old TV stand, simply because they do not realise just what a diverse range of AV furniture styles are now available. Therefore it is vital that retailers invest in display stock and the floorspace for a range of furniture products to catch the eye of the consumer. Unless the TV buyer is actually looking for a new stand with their TV purchase, there is little chance of a valuable trade-up sale simply by waving a brochure at them.”
Expert advice
The last word in this accessories debate goes to Atlas Cables’ John Carrick, who emphasises the importance of detailed knowledge: “Specialist hi-fi and home-cinema systems need experts to specify and sell them. This is where the add-on sales value of products such as cables gives the advantage back where it belongs – to independent retailers.
“The selection of the right cables is a key area of expertise in this field, and we believe that it is important that consumers should expect to be provided with a high level of support when choosing and installing any part of their home-entertainment system.”
That’s good news for the knowledgeable independent then.

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