The heady days of double-digit growth are over for merchants who sell televisions, stereos and other home electronics products. And that could be good news for consumers.
Home electronics retailers have enjoyed a booming business for the past five years, benefiting from consumers' rapidly growing incomes and the introduction of popular new products such as the video cassette recorder.But the merchants now are experiencing the flip side of good fortune. Economic uncertainty has slowed consumer spending and no hot new products have come along to pique shoppers' interests.
The result is that some retailers are closing stores opened in more robust times. The merchants who remain are fighting harder for the business that's out there, offering bargain prices and other incentives to attract shoppers.
"The whole industry is softer than it used to be," said Greg Smith, assistant editor for NARDA News, the magazine of the National Association of Retail Dealers of America, a trade group representing home electronics and appliance retailers. "But you have to remember, this is an industry that's gotten addicted to double-digit growth."
He did not have industry statistics for the past five years, but Smith said retail sales of home electronics are expected to grow by about 5 percent nationally in 1988.
"Some industries would say hooray about those numbers," he said. "But consumer electronics retailers are used to much better."
Indeed, manufacturers and retailers of home electronics products have benefited from the introduction of one new product after another for the past decade, Smith said.
Microwave ovens, compact disc players, video cassette recorders and telephone answering machines - now standard in many homes - are just some of the new items that have spurred sales in the past 10 years, he said.
Tom Lauterback, a spokesman for the Electronics Industry Association, a Washington D.C. trade association representing manufacturers of home electronic products, said wholesale shipments of those products increased 16.1 percent in 1980 to $9.3 billion. Three years later, the industry grew to wholesale shipments of $20 billion, he said. In 1986, the last boom year for the industry, shipments were $26.4 billion.
But those boom times ground to a halt last year, when the value of the U.S. dollar dropped against foreign currencies and made imported goods more expensive. Since many home electronics products are made overseas, Lauterback said, the impact on the electronics industry was immediate.
Wholesale shipments rose only 2.5 percent in 1987 to $27.1 billion. He said the electronics industry is projecting growth of 4.5 percent in 1988, to $32.4 billion, and growth of 5.5 percent in 1989, to $34.2 billion.
"The state of the industry is slow growth now," Lauterback said. "Many of our products are mature, and it is not the boom period we have had."
To cope with today's slower times, home electronics retailers said they are adjusting their selling strategies, cutting costs and abandoning markets that are too competitive.
Some merchants also are saving money by reducing their advertising. Kathryn Andrews, a spokeswoman for The Hartford Courant, said in-paper advertising for consumer electronics retailers is off 43 percent for the first six months of 1988 compared with the same period last year.
"The VCR was a whole new category, which really stimulated sales," said Smith of NARDA News. "We've had TVs, and we may get better TVs. But there's been nothing to match the VCR."