Essential add-ons

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Accessories have long been hailed by manufacturers and switched-on retailers as the indispensable high-margin add-on for any consumer electronics sale. But on the other side of the till, media hype about “rip-off Britain” and negative publicity generated by events such as the Competition Commission report on extended warranties a few years ago have conspired to give consumers a jaundiced view of anything that smacks of an ‘add-on’. Is that ‘essential item’ the salesperson has just thrown into the mix really that crucial to the full enjoyment of their imminent purchase?

A question of presentation

Maybe it’s about presentation. There’s a big difference between an item that is necessary to the full enjoyment of a product and its features from the moment of purchase, and an enhancement that widens a product’s usability or protects it in more extreme use – such as a pair of waterproof ‘sports’ headphones for an MP3 player.

For example, should a new large-screen TV or upmarket DVD player/recorder ever be sold without an HDMI lead included in the price? If you have just forked out hundreds of pounds for an item, should you really have to pay extra to access the full performance it was originally designed to give? It’s like buying a 10 megapixel digital camera that only gives half that resolution when using the standard cable to transfer the images to your PC: to ‘unlock’ the extra resolution, you need to fork out another £25 for a ‘special high-quality cable’. Perhaps consumers’ scepticism is therefore partly justified, but it does highlight the importance of retailers having excellent product knowledge, and introducing the concept of accessories sufficiently early in the sale so the customer doesn’t feel tricked.

If consumers as a breed had become sceptical about the sudden mention of that ‘essential additional item’ just as their credit card was about to go in the chip’n’pin machine, perhaps that feeling is now becoming a thing of the past.

As Ric Stevenson, consultant product marketing manager for Techlink International, declares: “I’m not sure there is a great deal of suspicion of retailers these days. I feel that the high-street retailers that have endured the slings and arrows of this latest outrageous recession and remained in business are viewed with more respect from consumers than they have ever been. Against this backdrop, selling in higher-value accessories with genuine benefits should be easier than ever.”

Aside from the ‘respect’ issue, the timing of any introduction of accessories into a sale is certainly seen as being of crucial importance – something that Steve Reichert of Armour Home is keen to emphasise: “Consumers are perfectly receptive to accessories that genuinely enhance the performance or use of their main product,” he says. “Today’s consumer is more sophisticated and better informed than ever before, so ‘ambushing’ him or her at the till, after closing a sale for a main item, is almost always going to have a negative conclusion.”

Vivanco’s Chris Moseley echoes this view, referring to the ‘acceptability’ aspect of accessories: “If essentials are sold during the sale, it’s accepted. If little or no effort is made to sell what is needed during the main part of the sale, and the most expensive HDMI lead is offered when the customer hands over their credit card, then clearly this is unacceptable and just giving the accessory industry a bad name. When purchasing new CE products, it’s almost always the case that extra ‘essential’ items are required, for example an HDMI lead for a DVD player,” he says. “It’s infinitely frustrating for consumers to return home with their new purchase, only to find that the salesman hasn’t sold them everything they need to get their product up and running due to fear of being misunderstood as pushy or trying to increase their commission by selling ‘add-ons’.”

Sony rightly makes a point of differentiating between accessories that should be introduced at product sale time and those that are ripe for after-market opportunities. Comments Category Marketing Manager for Essentials, Ben Law: “The myth is that an accessory has to be sold at point of purchase, but good service and after-care support can result in the consumer returning to purchase the accessory. Independents are the best suited channel to fully understand the consumer’s accessory needs and offer great advice as a result.”

Has the penny finally dropped?

So having heard for 15 years or more that accessories really do offer a great add-on sales opportunity, do all manufacturers and retailers finally ‘get it’?

Sony says it now recognises the importance of accessories to retailers to such an extent that it has created a dedicated department for this function, although it’s slightly surprising this hasn’t existed before, given the historical and current breadth of products in the company’s portfolio.

Armour Home PR manager Steve Reichert sounds slightly irritated that the question is even being posed, commenting: “Well, we sell a huge volume of accessories, and as they are nearly all sold through independent retailers, I think it is reasonable to deduce that successful retailers have understood and acted upon the message very well. To be frank, in today’s challenging market conditions, any retailer not attempting to maximise every sale by attaching accessories is facing a very bleak future.”

Techlink’s Ric Stevenson isn’t quite so convinced, although he does feel the situation is changing: “Not appearing to ‘get’ accessories or not maximising accessory sales as a viable revenue stream is certainly true of many retail stores – mostly because the end sale comes down to floor staff rather than management – but this is definitely changing,” he says. “Within the current climate, there are simply fewer feet marching through the store, and this has meant there is great time for sales staff to spend with each customer. This naturally leads to better sell-through of accessory products – particularly technical products like HDMI that need a certain amount of explaining.”

Supermarkets in on the act

If there was any doubt about the importance of after-market accessories in today’s market, you only have to take a look in the consumer electronics section of any Tesco or Sainsbury’s store… They may not always stock the most upmarket TV and DVD player brands – and whether it’s worth paying extra for a high-quality lead on a budget own-brand box is a moot point – but the fact that stores such as these devote significant amounts of prized retail space to accessories should be enough to convince even the most hardened sceptic of their worth. Armour Home’s Steve Reichert points out that Tesco has stated its intention to obtain a one-third share of the headphone market, and also applauds John Lewis for providing a wide and well-displayed range of headphones at various price points. Reflecting this trend, GfK account manager for consumer electronics, Paul Carrington, notes that headphones are showing very strong volume and value growth in 2009.

He also highlights the chargers sector as a key growth area for MP3/MP4 accessories, and is keeping an eye on FM transmitters to see if they do as well this Christmas as they did in 2008 – when they accounted for a massive 41% of the portable media player market by sales value.

Flying in the face of the recession

The credit crunch and ensuing full-blown economic recession have certainly taken their toll, but Armour Home’s Steve Reichert says that accessory sales have held up very well over the past year, and in some cases have ‘surged ahead’, but he does admit he hasn’t been able to come to any firm conclusi
ons as to the reasons.

Speaking specifically for Sennheiser, national account manager Simon Brown feels that the effects of the credit crunch have been offset by bringing itself to the attention of a wider audience by securing a presence in accounts such as Tesco, and John Lewis.

However, Sony’s Ben Law highlights market feedback suggesting that consumers often want to upgrade default accessory equipment – for example, MP3 players by upgrading headphones to give them better audio quality. He does admit, however, that it is difficult to gauge whether this is more or less pronounced in a recession.

Vivanco’s Chris Moseley says he hasn’t noticed consumers ‘making do and mending’ rather than buying new accessories, pointing out that accessories don’t tend to go wrong, and that consumers tend to purchase new as and when needed: “The term ‘essentials’ represents this quite well,” he says.

Ric Stevenson at Techlink feels that consumers are more likely to stick with their old cabling and accessories products rather than spending money on an upgrade per se. “The real accessory opportunity remains on the back of a new TV sale,” he says, “when the customer is in a buying phase and is looking for a definite change and improvement.”

Sufficient support?

Manufacturers have long said they support retailers to the hilt when it comes to effective PoS material for CE accessory products, but is that really borne out by reality? Among the manufacturers we spoke to, the fruits of Alphason’s labours, for example, certainly seem to show that the support it offers its retail base has paid off – in some cases apparently doubling the sales of cables and brackets of those retailers stocking it.

Launched around a year ago, Alphason’s Viewsmart initiative for selling more accessories was devised to create a “clear, concise and eye-catching range of accessories that are simple for consumers to buy and easy for retailers to sell”, and is now being stocked by more than half of its customer base.

Alphason quotes a number of its dealers all around the country who are happy to testify to Viewsmart’s success. Among them is Matt Renault of Dacombe & Renault in Dorset, who says: “Traditionally we haven’t done well with wall mounts, but since installing the Viewsmart display, sales have almost doubled.” While Ian Gilmore, managing director of D&C Sound & Vision in Stockport, Greater Manchester, likes it because it simplifies the range and has reduced stockholding – improving cash flow into the bargain.

Sennheiser says it is in the final stages of implementing an ‘in fixture’ display for trial in ten stores, and is progressing a requirement for 90 off-fixture display units pre-filled with Sennheiser products and incorporating the Sennheiser brand name.

Meanwhile Vogel’s has recently introduced a mobile version of its online FlatscreenFitter tool, widely used also by retailers, that lists over 10,000 different types of flat screen TV and matches them to the Vogel’s mounts.  The new mobile version of this information will enable the customers to select the right screen and wall mount combination within minutes.

Sony is making a big thing of its efforts to ensure its displays explain the company’s technology in consumer language, not technical jargon, and says it tries to use displays where they can add value – not just a one size fits all. For Christmas, it has developed a wide range of displays for Sony batteries which it says it can tailor to meet the individual customer’s needs, such as store size and merchandising location.

Vivanco offers a free training service for all independents called Focus training, which works on how to correctly sell essentials and work with the customer to avoid selling unnecessary add-ons, but ensure each and every customer buys what they need and at the level they require – so they don’t have to make a visit to a competitor or internet site to buy what could have been sold with the main purchase.

Still energised

No feature on consumer electronics accessories can be complete without looking at that evergreen category –  batteries. According to Energizer, every household in the UK owns an average of 30 battery-powered devices, so there is certainly a comprehensive target to aim at.

Energizer reckons that the recession has been shaping the battery sector, with ‘staying at home’ fast becoming the new going out, and says that the growth of in-home gaming is providing an opportunity to boost battery sales.

Figures from GfK indicate a somewhat surprising 12% leap in the UK battery market in August 2009 compared with the same month in 2008 – accompanied by a small but still significant 3% rise in value. However, the long-term picture for batteries still shows a decline, with a 3% fall for total annual sales (2% in value) for the 12-month period to August 2008.

In terms of the market split between alkaline, zinc and lithium, some interesting patterns emerge. Alkaline still takes the lion’s share of the market, hovering at or around the 90% mark. Any share the alkaline sector loses seems to be almost exclusively to zinc – whose share has varied widely over the past year between a low of 3.9% in November 2008 to a high of 7.9% in January and February 2009. The smallest sector, lithium, has built steadily through 2009 from a low of 1.8% in December 2008 to 3.2% in July 2009.

Paul Carrington, GfK account manager for consumer electronics, highlights the increase in sales of zinc batteries in recent months, ascribing it to “more customers appearing to be voting with their wallets”.

An interesting new device from Varta is designed to address this multitude of battery-powered products and to help with recharging them on the move. Called the V-Man, it’s a portable power pack for charging mobile phones, satnav systems and MP3 players. A fully charged V-Man is claimed to store enough power to charge up to two flat mobile phone batteries or ten MP3 players.

Highlighting research indicating that one third of consumers walk away confused from battery displays and do not actually make a purchase, Varta has recently revamped its entire batteries range to make it easier for consumers to pick the right power for the right device. Called Tri-Energy, the new range uses device icons, colour coding, detailed PoS and strong imagery to help consumers identify which type of battery is right for the job they want to undertake.

Duracell has also put in some work on its battery range to help consumers remember which size of battery they need. Seeming to refelect the ‘@’ symbol – perhaps to link in with mobile Internet usage – the stylised logo uses yellow for AA, green for AAA, blue for the rectangular 9V size, red for C and mauve for D.

All in all, then, there still appears to be relative buoyancy in the accessories sector, but the keys to continuing success appear to be ever-better retailer product knowledge, and a keen awareness of when to introduce accessories into the sale.

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