CES 2009: Focus on the Affordable

This year's CES, which takes place from January 8-11 in its usual spot, Las Vegas, NV, will undoubtedly serve as host to fewer visitors, and carry a much more restrained focus, so to speak, than in previous years. The reason is obvious: the state of the economy. But this isn't to say that there won't be plenty to see. On the contrary, we'll just see the focus shift to products, technologies, and features that might not have played such an important role before.

For one, this year's event will probably see more emphasis placed on affordable gadgets, like portable navigation and media players, over big-ticket items. If a company is promoting a big ticket flat panel TV, speaker system, or what not, bet your bottom dollar that his pitch will focus on an aspect of the product that will help to save energy and consequently, money.

But energy savings isn't the only place that manufacturers can hang their affordable hats: things like Internet TVs could negate the need to buy a separate, large display monitor for your computer; while the new slew of Internet radios might encourage people to spend less on digital music and CDs. Then of course there's the age old argument that, when you have a fantastic home theatre system at home, why would you need to head out to the movies (or elsewhere) on a Friday night? Taking that into consideration as well, I wouldn't be surprised to see things like high-tech board games and other home entertainment gadgetry being pitched to passers-by.

More affordable gadgets as a whole will see greater presence at this year's event: everything from rechargeable batteries that help save the environment and dollars to video games and systems; one area that is still doing well despite the economic situation. Other small-ticket items like portable navigation devices, MP3 players, and iPod-related fare will be hot with retailers looking to offer consumers a greater selection of items that won't hurt their pocket books.

Don't take this to mean, however, that makers of the more expensive and sophisticated technology will be twiddling their thumbs on the show floor because retailers think consumers won't be investing for the first part of this year. CES will still serve as a time to learn about the new technologies, find out what's what, and make at least preliminary, if not final, decisions on what to bring in store.

As some other reports have pointed out, CES could also serve the dual purpose of helping business partners avoid additional travel. Many dealers meet with vendors after CES, often times traveling to their offices (or vice versa) to make plans for the year. CES could, in many ways, take the place of this extra travel costs: let's find out everything we need to know at the show now, then make final decisions by phone, e-mail, or video conference later.

Anecdotally, after asking around, I've heard speculation that attendance to this year's CES will be down anywhere from 15 to 40%. When we're looking at Canada specifically, this will be hard to tell. It's safe to assume that most custom A/V dealers won't be attending the show since CEDIA is really their "beat". Major manufacturers and retailers will likely be sending a smaller complement of staff down. But smaller companies may see this as an advantage, sending their usual roster of staff, both on the dealer and and manufacturer/distributor side, in order to ensure that they don't miss a beat.

At this point in the game, all we can do is wait and see. We'll keep you updated through reports straight from the show floor. Stay tuned!

What Will They Think of Next?: Deal-Stalking Site

With people searching frantically for deals before they fork over dough to shop, it comes as no surprise that some are attempting to capitalize on the trend. A new Website called http://www.jungleninja.com/ "stalks" the Amazon.ca Website for deals 24/7, then posts them, with the best ones ranked at the top. The site, set up by a company in Winnipeg, MB, collects info on any Amazon product that's reduced by 20% or less.

"Shopping on Amazon is really like a cyber jungle with huge discounts hidden all over the site," explains Web developer Evan Falk. "With the economic downtown, my colleagues and I created this free alert so consumers, including ourselves, could find the best bargains fast."

These guys could certainly be on to something. The site is accessible for free, does not contain any spam or ads, and is not affiliated with Amazon.ca in any way. But should it take off as a "Google for deals" of sorts, these guys might be in for a treat.

Discount Retailers Attempt to Take a Big Bite Out of CE Sales

Discount retailers are arguably profiting more, in some sense, from the downturn in the economy as shoppers flock to those stores known to always offer great "deals". So it comes as no surprise that many discount shops are attempting, more so than ever, to take a big bite out of the consumer electronics market this holiday season.

This weekend, I was surprised at the number of Wal-Mart commercials that aired (during my favourite primetime programs!) centred around flat-panel TVs, home theatre, and even Blu-ray. I'm used to seeing plenty of TV marketing dollars from the mammoth retailer, but of all product segments, I wouldn't peg Wal-Mart to be spending so much to plug things like Blu-ray and flat-panels. Kid's toys, home decor items, clothing, DVDs and CDs, yes. But big-ticket CE items? I'm genuinely surprised that so much of the marketing budget went toward this category. The move is a clear indication of one of two things: Wal-Mart is making its mark known as a CE retailer; and/or the retailer is responding to the prospect that home theatre is going to take over as the main activity of choice during these sad, economic times. And of course it goes without saying that one should

Aside from that, pricing is also mind-boggling. Right now, a name-brand 42" 1080p LCD is $950, and an up-converting DVD player is $50. (Interestingly, no Blu-ray players are featured on the Wal-Mart Canada Website, although Blu-ray discs are in abundance). At Costco, a 42" plasma is $860, and a Blu-ray player is $270. At retailers like Tiger Direct, pricing is relatively the same. A colleague told me this morning of a friend who just bought a 46" TV (name brand) for $800 over the weekend! If you can spare the cash and are in the market, now is certainly the time to buy a new TV!

But from a retailer perspective, what happens when these pricing wars continue? The same thing that has been happening for the entire year, even before the recession came into play: other retailers are forced to lower their prices; if not to be in line with discount stores, at least to be close. Products are sold off at almost no margin just so smaller companies can sustain themselves and make it through the storm. And more focus is placed on "added value" services, like free delivery, after-sales service, installation, and product expertise (certainly not a bad thing).

Still, it's an incredible observation overall knowing that just a few years ago, a plasma or LCD could not be had for less than a few grand. To put this in perspective, I searched for some old news stories on our sister Website, http://www.marketnews.ca/, and cam across this 2002 announcement from LG Electronics about the company's brand new plasma displays: the cheapest was $8,500, and the most expensive 60" model was a whopping $26,000: the price of a new car! My, how things have changed...

[Photo: Screen shot at http://www.walmart.ca/]

Black Friday, Holiday Shopping Looking Up...Considering

You've probably been bombarded with the words "economy", "downturn", and, (yikes!) "recession" over the past few months but, as Tracy Mullin, President & CEO of the National Retail Federation (NRF) puts it, "no one is canceling Christmas because money is tight." To the contrary, while customers will be tightening their belts a bit, they're still going to be out there shopping like they do every other year. They'll just be more mindful of snagging the best deals.

The NRF says that price will play by far the largest role in purchasing decisions this holiday season, with 40% of respondents to its Holiday Consumer Intentions and Actions Survey citing sales or promotions as what they'll be looking for. This year represents the smallest increase in planned spending: up just 1.9% to US$832.36 per person vs. $816.69 last year. But the number is still up, which is a positive sign.

Shoppers will likely cut back on gifts for the family, says the NRF, because they feel their family will "understand their current situation". Surprisingly, however, many will still make personal purchases, waiting until the holiday season to take advantage of the best deals. Overall, the NRF expects holiday spending to increase 2.2% to US$470.4 billion: not too shabby, considering.

As for Black Friday, which is one of the busiest shopping days of the year and scheduled to take place on Friday, November 28 (right after Thanksgiving), the NRF projects that shoppers will be gravitating more toward "personal and practical gifts" instead of big-ticket items this year. The Federation cites things like DVDs, CDs, and books as being most popular in the technology category (55.6%), followed by gaming consoles, Blu-ray players, and other like items (30%). (Funny enough, HD DVD players actually outsold Blu-ray players on Black Friday last year!)

Consumers will be changing one other thing this year: more will be opting to pay by cash instead of credit. But with good enough deals, they will fork over the dough.

Given the number of e-mail notifications I've received over the last few days about product price reductions, it appears that retailers (and manufacturers) are working hard to offer enticing enough deals to keep customers in the shops. Remember: if you don't shop while the economy is in a downturn, you'll only make it worse! (Some may call that female logic, but I digress).

In retrospect, it's eye-opening to think that at this time last year, retail prices were dropping drastically due to the strength of the Canadian dollar. Meanwhile this year, price drops are happening for a completely different, and opposite, reason. But on a positive note, it just goes to show that things happen in waves, and for every downside there's an up. I'm confident that holiday shopping will be just as hot this year as it was last; leading up to bigger and better years to come!

Happy Shopping!

Gift Cards Could Suffer From Economic Woes

I received an e-mail today - one of those forwarded chain notes I often get. It supplied a list of retail stores, and warned recipients not to purchase gift cards as Christmas presents from these companies because they have announced plans to close up shop by January 2009. This got me to thinking: will gift cards, a typically popular holiday gift, suffer in wake of the current economic climate?

An Ipsos Reid study conducted around Christmas-time last year found that 88% of respondents like receiving gift cards. In fact, 72% would rather a gift card than an actual gift! I don't think these numbers will drop this year simply due to fear that a store might close, but if e-mails like the one I received continue to circulate, it might just scare people off from buying gift cards.

The whole idea of a gift card is that the person can buy something they want. While it replaces an actual gift, what I've often found is that you end up spending more money than you otherwise would have with a gift card. Now if the recipient ends up getting nothing from the card because the company went out of business (a horrible experience: trust me, I've been there!), you've now both disappointed the person and lost a whack of money.

Will you be buying gift cards this year?

As an aside, I thought it funny that the most often-requested gift item I've heard over the past few months from family and friends is in fact a gift card, but of a specific kind: a gas card! You know times are tough when filling up your car becomes a luxury!

Can Vegas Sustain Another CES?

Trade shows, especially in the technology industry, often gravitate to the grand city of Las Vegas. Why? The location is always upbeat, the space accommodating, and the area fairly central to most. But anyone that's traveled to an event there over the past few years knows that the costs are also exponential, and only getting larger. If you go to Vegas for a show like CES, you're liable to pay upwards of $300/night for a hotel room that would normally run for half that. A good meal is tough to find for a reasonable price (although plenty of fantastic meals are to be had if you're willing to fork over the dough for them!) And drinks? You're lucky to find anything, and I mean anything with even just a drop of alcohol for less than $10. But with the economy in the state that it's currently in, will Vegas be able to keep up its perceived price gouging of trade show-goers?

The next massive show to arrive in Sin City is indeed CES this January. At this year's CEDIA EXPO, which took place in Denver, CO, many were rumbling that CES would be jumping ship to another city once its contract was up. The reason? Pricing was getting ridiculous in that great city known as Lost Wages. Some claimed that this wasn't entirely true: the CEA was just bluffing in an effort to get Vegas to wake up to the incredible loss the city would experience if events companies started moving their business elsewhere. Neither of these rumours have ever been substantiated, but we have seen evidence that Las Vegas definitely needs to, and might already be, waking up to the effects economic uncertainty can have.

Visit the official CES Website (http://www.cesweb.org/), for instance, and you'll see a ton of hotels highlighted in bright yellow, signifying that they're offering reduced rates for show attendees. The most dramatic is the Excalibur, where a room that was $219 has now been reduced to just $141.

Aside from the show, the downturn the city is suffering from is becoming quite apparent. According to the Las Vegas Meetings and Travel Website from the Conventions and Visitors Authority, the number of visitors during the month of September was down 10.1% when compared to September 2007. In August, visitors were down 4.3%. The number of attendees at conferences was down 10% in Sept. and a whopping 22.3% in August; while the number of conferences actually held during those months was down 17.9% and 7.2%, respectively when compared to the prior year. Airline passengers arriving to or leaving from Vegas was also down: 9.9% in August and 13.2% in September. On average, all of the aforementioned figures were down at least 4% throughout the entire year of 2008 when compared to '07.

Meanwhile, even the gamblers are pinching their pennies. A recent Reuters report indicates that Vegas gambling is down for the ninth month in a row, while the take for casinos has dropped US$58 million from one year ago to an astonishing US$1 billion! Company shares on the stock market are also plummeting: Las Vegas Sands Corp. dropped from US$122 to just US$6; MGM Mirage from US$93 to US$11; and Wynn Resorts Ltd. from US$139 to under US$44.

While you won't see relevant companies opting out of attending CES this year altogether, you will see a cut back in the number of employees going down to the show. This means fewer flights, fewer dollars acquired from hotel room bookings, fewer dollars spent gambling, and fewer food and drink sales. Booths at the show will likely remain as big and flashy as they always are, but it's very possible that companies will be scaling back on even booth space as they consider bookings for next year's show.

What does this mean? The city of Las Vegas should really be pro-active in addressing all of these concerns, for both visitors and potential business partners that are looking to hold their conventions, events, and parties there. CES isn't moving to another location just yet, and has never announced that it is looking to do so either. But everything could tumble like a deck of cards if Vegas doesn't start proving itself a worthy, and reasonably-priced, home for convention-holders and goers to spend their money.

[Photo: Las Vegas News Bureau (LVCVA)].

Recession, or Minor Setback?

Aside from the pending election, the biggest buzz nowadays is about the existence (or perceived existence) of a "recession". But are things really that bad north of the border here in Canada? Many would beg to differ.

An interesting article in the National Post written by Jacqueline Thorpe and Paul Vieira quotes the governor of the Bank of Canada, Mark Carney, as stating that the "sky is not falling" in this country, adding that while we should prepare for "sluggish growth", we do not "have the imbalances in our economy that other economies have going into this time of difficulty."

This shouldn't be taken to mean that Canadians will skate through this time completely unaffected. Companies will need to scale back certain niceties, and make minor adjustments until the situation blows over (and let's face it: it will blow over eventually). But the important thing is to remain as close as possible to "business as usual". After all, when things get back to what many would call "normal", it'll be those who kept their head high through the tough times that benefit the most.

What's more, many are confident that the tech sector specifically is somewhat "recession-proof", if not at least recession-"resistant". TWICE Magazine claims that U.S. TV manufacturers are "cautiously optimistic" that sales will continue to be strong through the upcoming holiday season, despite what's going on in the economy.

The reason is obvious: if you cut costs by not eating out, going shopping, or heading out to see a movie, what do you do? Stay at home! You can take the kids out for dinner and a movie every Friday night, or invest in a home theatre system (and some Ben & Jerrys!) at home that can be enjoyed for years and years to come instead of just one night. As research firm Futuresource Consulting puts it, these items offer much better "value-for-money", along with "tangible benefits." On the TV end, the only cut-back Futuresource has observed is in size: it seems that rather than fork over the extra dough for 50"+-sized panels, customers appear to be, more often than before, opting for 32" and 42" sets instead.

The optimism doesn't just relate to the TV industry, though. It also goes for computer-related products, and even video games. Sure, it isn't healthy to stay seated on the couch every weekend just because you don't want to go out and spend money. But why not watch TV while on the treadmill? Or play some Nintendo Wii games with the family instead of heading out to Chuck E Cheese? Bottom line: there is a way that consumers can reduce frivolous spending that can also benefit the CE industry.

Nevertheless, retailers, manufacturers, and distributors are, and will continue to do what they have to do in order to be cautious and remain profitable. I've seen several e-mail notifications that advise of price increases due to the "falling Canadian currency", or that regretfully announce the cessation of certain incentive programs for the time being. C'est la vie, as they say. But the most important thing to consider is to keep your business strong by whatever means necessary. Otherwise, you'll be eating everyone else's dust once things pick up again.

Lots Still To Be Thankful For

By: Lee Distad

If you’re a newshound, and especially if you have an interest in financial and business news as I do, things look pretty grim. Turn on the TV, pick up a paper, or go to the web and you’ll see headlines warning of impending doom across a broad swath of sectors: Banks are failing, the price of oil is dropping, container ship charter rates have dropped to nearly zero, and so on. And retail, oh lord; the prognosis that on-air pundits are giving for retail and the upcoming Christmas selling season is beyond terrible.

Still, let’s take time today to focus on what’s important, and better yet what we still have to be thankful for. How about some perspective to start with: this isn’t the first time that we’ve seen a weak US dollar, fluctuating energy prices, and spiralling inflation. It’s not the end of the world yet, this too shall pass. Let’s be thankful that the exposure of Canadian chartered banks to sub-prime asset-backed securities has been minor. On the same vein, let’s be thankful that lending standards in Canada have been more rigorous in the last five years than our neighbours to the south, so that we’re less likely to see a tidal wave of mortgage defaults here. On a more industry-centric note, let’s also be thankful that Canadian consumers still have an appetite for cool shiny toys like flat-panel TV’s, smart phones, and in-car navigation. This Christmas may not be the best one ever, but it’s unlikely to be bleak for Canadian retailers.

Lastly, let’s all remember that the reason why Canadian Thanksgiving is a month earlier than American Thanksgiving is because we have more to be thankful for.


Have a safe and happy Thanksgiving.

Happy Thanksgiving!

By Gordon Brockhouse

The news headlines over the past couple of weeks have been anything but cheery: stock-market meltdowns all over the world, failures of once-mighty financial institutions, a tumbling loonie, bitterly divisive elections in Canada and the U.S. So it’s understandable if Canadians head into this holiday weekend with a high degree of anxiety.

I think we’ll all be happier on Tuesday morning if we can stop worrying for a bit. The fact is we have a lot to be thankful for on Canadian thanksgiving.

Even if our portfolios have taken a shellacking, we still have a functioning economy: one that added 107,000 new jobs in September, when the meltdown began. Our own industry is making a contribution, as you can see by the story on our main page about Future Shop hiring 6,000 seasonal associates for the holidays. Regardless of where the markets go next week, the vast majority of us will still be working and providing for our families.

Of course, many individuals and families have been hurt by the economic turmoil. Thankfully, our blessed country has the institutions and generosity to assist those who aren’t so fortunate.

Even if we’re witnessing two unusually nasty elections, the mere fact that we have elections is another reason to give thanks (and to get out and vote on Tuesday!). Even if we don’t always think well with our leaders, we get to choose them and hold them to account. We have constitutions that let us change governments peacefully, rather than at the barrel of a gun.

There are many other reasons to give thanks: family and friends to name two of the most important.

So instead of worrying, let’s all do what we’re supposed to do on Thanksgiving holiday weekend, which is 1) relax and have some fun, 2) give thanks, and 3) eat a really big turkey.

Happy Thanksgiving to all our readers from the Marketnews team!

Canadians Are Mediocre?

Imagine being calling mediocre...right to your face. Now imagine that accusatory word spewing from the mouth of your own country. The Conference Board of Canada has released a “report card” that measures our country’s performance on six levels: economy, innovation, environment, education, health, and society, then compares us to other developed countries.
The result? Apparently we fail to innovate, and are “complacent” and “unwilling” to take risks. Not only this, but we’re supposedly uncomfortable with success, excellence, and differentiation. The Conference Board is making us Canadians look like boring sloths who want nothing more than to ride the coat-tails of the rest of the developed world while we drink beer and relax in front of the TV.

At least we received high scores in one area: education. But apparently we don’t produce enough post-graduate degrees in areas that actually support innovation (what, then, do these degrees support?). Without innovation (which we in turn scored “stunningly poor” on), we fail to develop environmentally-friendly technologies, and thus fail in the environment category as well. In short: it appears that the Conference Board admits we’re smart, but says we don’t use our brains.

“This culture holds Canada back in entrepreneurial and technological innovation,” said the report card.

Here’s my evaluation of this so-called report card: A+ for effort. I wouldn’t take it so seriously. If you look at the results in a positive light, perhaps Canadians feel that, although we have the brain power to innovate, we’d rather let the others do all the work, while we sit back, manage and evaluate the process from afar. Interestingly, we scored 7.8 out of 10 when asked how satisfied we were with life. Maybe we’re smarter than you think…

As a side note, to all the parents out there, I’d cut your kids some slack the next time they bring home questionable grades. If this is how our country rates progress, we might be a bit too harsh on ourselves.