The U.S. Census Bureau released May retail sales numbers for various retail trade sectors, and it struck me that if you reside in the consumer electronics sector, you have a challenge to overcome.
This is my perspective to this problem. The government figures indicate an overall decline in retail sales of 9.7 percent in the period from March through May 2009. A look at the consumer electronics sector (electronic and appliance stores) for the first five months of 2009 show an overall 8.2 percent decline in sales. At first glance, if one correlates the declining trend in overall retail sales with the specific consumer electronics decline, the indication is clear, a declining market. Industry forecasters also point to the fact that one of the major electronics retailers, Circuit City, no longer exists, and government stimulus checks are no longer in the hands of consumers, and that may also be a factor in this declining trend.
Not so fast. Demand planning professionals in specific companies, for instance Apple, Palm or certain laptop manufacturers may have a more difficult challenge at hand. Certain products such as mobile smartphones or mini-laptops have an opposite trend, and in some cases, consumers can’t even buy the product if they wanted to. My recent post on the Palm Pre is a case in point. The takeaway here is that organizations cannot just rely on broad market sales indices, but rather need the ability to dig into specific end-item product demand to ascertain a true picture. While some products may well be in decline, others may be exploding, even within a declining market sector.
This is one of the prime benefits of today’s more sophisticated demand planning and management software applications. They provide your planning organization with the ability to succinctly trend demand for specific products, by sales channel, or by geographic region. As the analogy goes, you may have a few dogs, while also having some stars in your product offerings. The key is having the planning intelligence to determine which products need to be ramped down vs. which need to be ramped-up.
Sounds fairly basic coming from Supply Chain Matters, but far more difficult if you have not invested in more sophisticated capabilities in your demand planning processes.