Retail Observer

RETAILOBSERVER.COM APRIL 2017 50 A ccording to a recent Consumer Technology Association report, people in the United States are rapidly shifting their video viewing habits. Today, nearly half of Americans are choosing to watch video programing on devices other than traditional television sets. In 2016, only 51% of the U.S. population watched video on TV sets compared to 62% in 2012. The big shift is toward portable devices; smartphones, tablets and laptops. In 2012, this group weighed in at 24%, whereas today 40% of us are watching video on smaller screens. A recent Nielsen study reports that between 2011 and 2016, Q3 traditional TV viewing by 18-24 year-olds dropped by more than 9-and-a-half hours per week, or by roughly 1 hour and 20 minutes per day. In percentage terms, Q3 traditional TV viewing by 18-24 year-olds was down by 7.4% year over year and has now fallen by roughly 40% since 2011. The same report shows that older millennials (25-34) watched 20 hours and 4 minutes per week in Q3, a 5.2% decrease year- over-year but a more expansive 27.7% drop over 5 years. And older folks, as you might expect, are watching about the same amount of TV per week. Put these two reports together and you find that not only are people moving away from TV-room viewing in general, but that there are far fewer viewers in the up-and-coming category. Imagine the turmoil that traditional programing providers (cable, phone and satellite companies) are experiencing. People are opting to cut cords, installing antennas, or choosing smaller programming bundles all in an effort to reduce monthly TV bills. Streaming video providers (Netflix, Hulu, Amazon, etc.) are winning out as the consumers' video source of preference. This, by the way, is why you've seen a mad rush for cable and telephone providers to enter the home technology business. Take all of this and add to it the conditions that have existed for the last 10 years or more. Shrinking margins (or no margins) thanks to a competitive retail landscape, big TVs no longer requiring traditional delivery, paving the way for e-commerce retailers like Amazon. So this, in addition to a shrinking market, indicates it's not your fault. The category is cycling away from you. Manufacturers have failed at coming up with model and design changes sufficient enough to prompt consumers to trade-up to newer more exciting technology. Brand-name regional and national retailers are taking a hard look at "strategic alternatives" to the category. You probably should do the same. Start by considering what the category means, not to you, but to your business. What positive attributes are there? Assess the value for each of the following: traffic, sales revenue, margin, inventory turns, and business image. After you've done an objective assessment of the business, consider what you need to do to make it more successful. What natural add-on items aren't you selling now? What additional services can you provide? Are you making the most of other promotional benefits that televisions can provide? If you're in multiple categories (say furniture, mattress or appliances) what buy-and-get promotions can you run? Consider trade-in, trade-up sales. Go old-school and just bust a price on a model for both traffic and business image purposes. Get creative. I grew up and spent most of my career in the consumer electronics side of our industry. So, while it may sound like it, I am not bluntly advocating that you abandon the category. Just know the facts that impact you, assess accordingly and take action. The point is, do something about that valuable floor space. Make it work or use it for something more productive. TELEVISION VIEWERSHIP AND HOW IT IS AFFECTING YOUR BUSINESS Jim Sendrak Consumer Electronic Trends Jim Sendrak is executive VP of consumer electronics and marketing for MEGA Group USA. He has worked in the retail business merchandising consumer electronics for three notable national and regional chains. Sendrak moved into buying group management and currently helps the 1,700+ members of MEGA Group compete and profit in markets where "big box" retailers are so prolific. RO

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