Retailers Discuss Tough 2007, Show Hope for 2008
Some electronics retailers had huge success in 2007, but the year left others bruised. A CES retail panel featured executives from both kinds of companies.
The chief executives of arch rivals Best Buy and Circuit City Stores appeared together onstage Tuesday before a big crowd at the Las Vegas Hilton Theater. Asked to summarize 2007, they talked about two very different kinds of results for their respective companies.
Circuit City CEO Phil Schoonover minced few words about his company's recent struggles.
"We had a tough year, as many of you know," Schoonover said as he glanced out at the crowd in the darkened theater. But he added that Circuit City is in something of a rebuilding mode. "We're trying to fix the plane while flying the plane."
CEO Brad Anderson of No. 1 U.S. electronics retailer Best Buy sounded a different tune about his own company's fortunes, but acknowledged that the year wasn't easy.
"2007 was a good year for us, but there were more challenges than I think people thought there would be. We had a good year, but it was tough," he said.
The panel also featured Steve Eastman, Target's general merchandise manager for electronics; Chen Xiao, CEO of Chinese retailer Gome; and Vishesh Bhatia, group director of the electronics division of Al Futtaim, a retailer based in Dubai, United Arab Emirates. CEA chief executive Gary Shapiro moderated.
Circuit City's Schoonover expressed concern about high energy costs in the U.S. and said heating bills and other expenses were making would-be electronics buyers cautious. He added that Circuit City plans to be cautious with its own spending, at least in the year's first half.
Schoonover pointed out a bright spot in Circuit City's operations, however: the Web. The company saw 50 percent online revenue growth last year, and expects that business to grow by another 30 percent in 2008. Schoonover said Circuit City will have online sales in excess of $1 billion in 2008, compared with just $300 million three years ago. He sees digital televisions and home audio as strong product categories this year.
Best Buy's Anderson said he expects to see growth in U.S. sales in 2008, but added that Best Buy's Canadian stores have fared better recently than the company's U.S. stores. He didn't give specific projections for 2008, but said notebook computers and small electronic devices such as GPS's are hot items right now.
Eastman of Target also provided no growth projections, but said high-definition TVs, small consumer devices and gaming systems are strong sellers for Target currently.
Citing China's booming, overall economic growth, Gome's Chen said through a translator that he sees growth in "all categories" of electronics this year. He expects Gome to turn in "double-digit" growth numbers as a company and expressed confidence that Gome will grow "much faster" than the growth rate of China's national GDP.
Bhatia of Al Futtaim said he foresees huge growth in the UAE market for notebook computers. Citing how that Gulf nation has experienced a big upsurge in housing starts, he predicted that home appliances will be a strong category for Al Futtaim.
CEA projects 6 percent year-over-year growth for the U.S. consumer electronics retail segment, compared with 4 percent for the U.S. retail industry overall.
Editor's note: As part of our extensive coverage of CES, CNBC.com's Brian Clark and Ted Kemp will be at the event and contributing to this special edition of Tech Check.
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