Keeping Up Relations
Are we already at another CES again? It seems like the 2005 show just ended. Not that I mind; coming to the Consumer Electronics Show each year is a bit like going to your high school reunion. You catch up with old friends and go to a couple of good parties. Of course, there is the show itself, now bigger than ever, but when you get down to it, CES is about relationships—reforging the contacts made over the years, many of which have evolved from business relationships to true friendships. As big as our industry is, it still feels like a small community some of the time.
But there are times when those relationships can be tested. In this issue of Dealerscope, we cover the topic of relationships quite a bit, specifically those between vendor and dealer. There are a lot of retailers out there that are working very well with their manufacturer partners. But business is business, as they say, so things can come between them.
The market for consumer electronics has never been higher. In fact, recent CEA numbers showed that CE ranked at record highs on consumers' wish lists this past holiday season. But with that growth has come fierce competition. Just look at the video category; second and third-tier brands are crowding the space and forcing swift declines in average selling prices (We saw one 42-inch LCD HDTV with an SRP of just $1,700!), which in turn lowers margins for everyone. More and more, there have been fewer pieces of the pie to go around.
This is leading some manufacturers to bypass the dealer altogether and sell direct. That very issue is the subject of our cover story this month. But as you will read, most vendors are treading lightly in that space—perhaps some don't want to make the same mistake Gateway made with its foray into retail, or perhaps they realize that the dealer is still a very important part of their business.