Healthy margins from accessories sales have been on offer to independents for a couple of decades, but many still seem to do little more than dip their toe in the water of this potentially business-saving sector. Are accessories manufacturers finally losing patience over what they perceive as ‘accessories apathy’? Stephen Delany reports.
The potential value to independents derived from add-ons to standalone products has been bandied around for two decades and more. The nature of these add-ons may have changed over that period (15 years ago, who would have predicted a sizeable number of consumers owning multiple pairs of headphones to suit different listening requirements, for example?), but one fundamental remains: there is an unquestionable profit opportunity associated with accessories that is just waiting to be exploited.
To get an idea of just how big the missed opportunity could be, look no further than wall-mount TV brackets (“black glass, four-pole” TV stands are apparently now so very ‘yesterday’)… According to research carried out recently by Vogel’s, independents are selling just one in every 20 wall brackets to flat-screen TVs. Further, its research indicates that 62% of consumers do not buy their wall-mount with their flat-screen TV, but when they do, a massive 72% will shop at a different store from the one at which they bought the TV. The highly encouraging news for independents is that 90% of consumers are reckoned to make the decision to buy a specific wall-mount in-store. AVF’s Simon West emphasises that TV wall mounting is something that needs to be explained and ‘sold’, making it perfect for those independents that want to make the effort and really push wall mounting.
Yet when you look at the rate of change in the market, it’s hardly surprising that many retailers shy away from the relative unknown: frankly, it’s a potential minefield. And when you have taken the plunge and decided to make accessories a key part of your sales mix, how much of your display space should you dedicate to them, and for how long can you exploit them before needing to trust your crystal ball and identify the next lucrative trend?
All this said, independent retailers are still the preferred channel to market for many key brands, and most are still prepared to retain the independent route.
Loyalty to independents
None more so than Sennheiser, for instance, as sales and marketing director Peter May explains: “Sennheiser has not given up on independents at all – just the opposite in fact. We see them as an essential part of our strategy. They have the distinct advantage of having face to face communication with their customers – unlike many nationals – so have the chance to sell the idea of an accessory, explain the benefits, demonstrate the product and then close the sale. Their product knowledge is second to none and their advice is seen by customers as being independent and credible.”
He continues, “Those indies that work with us do well – my only regret is that we do not have more who see the advantages of stocking headphones; after all this is one of the very few consumer electronics product categories that is growing year on year. My message to them would be to get on board now.”
For the AVF Group, innovations director Simon West also emphatically supports the role of the independent in the company’s sales strategy: “We haven’t given up at all,” he says, “in fact we are looking more at the independents as a route to market, as we feel with the right support they can offer consumers better choice and service than ever before in a confusing marketplace.”
But it’s not just less publicly well-known names that are nailing their colours to the independent mast. Sony is one of the main consumer brands that still sees independents as a vital route to market for its products, as Matt Coupe, senior category marketing manager, Personal Imaging and Sound, Sony UK explains: “The independent channel has always been a very important route to market for Sony across a wide range of products, and it continues to be so. I don’t think it is true at all to say that independents have missed the boat with regard to the consumer electronics accessories market. In fact, their ability to sell accessories as attachments to larger purchases by understanding exactly what customers need has always been one the key USPs of the independent channel.”
If any retailers are kicking themselves for hitherto not having put major effort into accessories, then Armour Home PR director Steve Reichert has some encouraging words: “You won’t be surprised to learn that, as a major supplier of ‘accessories’, we believe nearly all retailers fail to fully exploit the profit opportunities that proactively selling accessories brings to a business,” he says. “But as for ‘missing the boat’, absolutely not. What’s done is done, but it’s never too late to start doing a better job and really helping your bottom line.”
Never giving up…
And you can’t get a much stronger statement of support than this: “We’ll never give up on independents,” says Steve Reichert. “They clearly have the ability to properly explain the features and benefits of every product they sell and have a stronger relationship with their customers than multiple stores.”
As alluded to earlier, even if you do take a step into the unknown and devote significant effort and display space to accessories, trying to decide how much can be a real shot in the dark – a point that manufacturers do understand. At IOS Company, for example, Neil Truckell observes that proactive independents are selling add-on accessories such as TV furniture and headphones successfully, and are reaping the rewards, but accepts: “The problem is space – how much to allocate to TVs and iPod systems to entice consumers into and stay in store, and how much to allocate to accessories that consumers know they need but are not the main reason they walked into the shop.”
On the other side of the coin though, Vogel’s UK general manager James Attfield is one of those market players who believes that independents have potentially missed the accessories boat – and he has some harsh words into the bargain: “Apathy, coupled with a lack of interest in understanding how accessory products are supporting them and trying to make a difference in the category, are at the heart of the problem. Independents have not educated themselves appropriately while other channels have. You can’t get good quality at cheap prices. It is impossible economically, and if you sell the same poor quality products as the other channels you will not have success as an independent.”
Even for those independents who have been profiting from accessories over a lengthy period, though, there’s no standing still. Every opportunity must be examined, every stone turned – just to keep in touch with the market, let alone get ahead of it.
But what else can be left to try? For Sennheiser’s Peter May, the secret is for independents to be bold in what they range across the various accessory categories: “Stock good, better, best; leave the bottom end of the market to somebody else, because they will not make money and they will not be giving the service they should be,” he says. “For around a tenner, an indie can be offering a branded quality product with a two-year guarantee.”
AVF’s Simon West is keen to distinguish between “upselling for its own sake” and “upselling for purpose” – his advice being to trade consumers up to better featured products that will honestly add value to their home entertainment experience, rather than simply trying to persuade them to buy something more expensive.
Meanwhile, Neil Truckell’s advice is to display hardware products on related accessories such as (in the case of headphones) tablet PCs – which he says should all be sold with a good set of headphones for when watching movies on the move.
Sony’s Matt Coupe observes that as sales of accessory products come largely from attached sales to bigger purchases, this is a good area on which to focus when looking to maximise profit.
The most categorical advice, though, comes from Armour Home’s Steve Reichert, who simply says to independents: “Think ‘accessories’: recognise that your survival actually depends on the ‘add-ons’ you can attach to your big ticket items – and not to the big ticket items themselves.” He continues: “Be alert to every sales opportunity. Accessories aren’t just cables and cleaning materials; they’re everything that enhances and/or maintains the main product.”
Big in 2012
So, for those bold retailers prepared to take a punt, what should independents be looking out for as the ‘next big thing’ in accessories in 2012? The general consensus seems to be a continuing focus on headphones and wall-mount brackets as the only two accessories sectors that are continuing to grow, according to research company GfK. More consumers are now owning a number of different headphones – earhook for sports, noise cancelling for travelling, high quality for the home and smartphone compatible for their mobile phone, so perhaps the growth in the sector is not surprising.
Neil also sees the huge success of the tablet computer as offering major potential for accessory sales (particularly headphones).
Focusing on upcoming technology, Armour Home’s Steve Reichert highlights the opportunity afforded by streaming: “Anything which receives signals via Apple’s ‘Airplay’ system is in with a chance,” he says. “However, also looking to be successful is the advanced new Bluetooth ‘aptX’ streaming loaded into the millions of ‘Android’ phones coming to the market, so expect a lot of speaker docks and audio systems which are ‘aptX enabled’.
Underlining the crossover between consumer electronics, PC and smartphone devices, Sony’s Matt Coupe sees the latest USB connectivity as being a rising star in 2012: “USB 3.0 hasn’t really taken off yet,” he says, “but could be big in 2012 as more devices come into the market – the speed difference between USB 2.0 and USB 3.0 is quite dramatic and I can see demand, particularly in the IT professional market. We’re also seeing a lot of interest in portable USB charging devices as people are increasingly reliant upon their mobile phones, laptops and tablets when they are on the move, and they provide a very simple service that many people need.”
One thing that can safely be said, is that the consumer electronics accessories market is going to continue changing apace, and become ever more technology led. To be fair to independents (or any retailer, for that matter), it’s hard enough to keep up properly with fast-changing technology – let alone all the add-ons that go with them – and the convergence of computers, smartphones, TVs and so on has made compatibility ever more difficult. But for the ‘glass half full’ eternal optimists, that simply means increasing opportunities to profit from the new developments.