Where Did You Shop?

Earlier this month, the market research firm BIGresearch released their results for the top five retailers for consumer electronics for December 2009. According to the company press release, nearly one-third of all adults (18 years old or older) surveyed indicated that they shopped at Best Buy most often when looking for electronics. Walmart was close behind, with one in five shoppers citing it as their preferred store.

Store Dec 2008 Dec 2009 Increase CEI
Best Buy 29.9% 33.1% 3.3 110.96
Walmart 17.0% 20.6% 3.7 121.63
Amazon 2.3% 3.6% 1.4 159.12
Target 2.1% 2.8% 0.6 129.57
Sears 1.6% 2.0% 0.4 124.58

Source: BIGresearch

The “CEI” figure is a measure of how much the consumer ratings for that store have increased. A score of 100 would indicate no change over the prior year. Of the top five retailers, Best Buy actually posted the smallest share growth but this makes sense given that it started with a large share. Amazon posted the biggest CEI increase in share; while its total number is small, it does indicate that people are more willing to shop online for certain electronics.

The big take-away from these numbers, however, is that Best Buy and Walmart apparently command control of more than half the retail consumer electronics market in this country. This could mean that it will be difficult for another competitor to enter the market, taking the place of Circuit City or CompUSA. And it also likely signals continued hard times for the small stores that specialize in high-end audio/visual equipment. Now that the holiday buying season is over, we have seen a spate of closing announcements among some of these small chains. Bernie’s in New England has filed for Chapter 11 bankruptcy and has started liquidation sales, and in the Los Angeles market, Ken Crane’s has closed four of their 10 stores.

All of this is a logical contraction of the retail marketplace, as the differences between products become smaller and the profit margins grow even thinner. Success in this market is all about shelf space and mind share, which favors major brands and highly-efficient retailers who can deal in massive volumes at low margins.