Electrical Appliances, Television and Radio Sets

SIC 5064

Companies in this industry

Industry report:

This industry comprises establishments engaged in the wholesale distribution of household electrical appliances (such as refrigerators, freezers, dishwashers, and laundry equipment), household and motor vehicle electronic sound or video equipment, and radio and television sets. The industry also includes establishments primarily engaged in the wholesale distribution of household nonelectric appliances (such as gas clothes dryers and gas refrigerators).

Wholesale distributors of electrical appliances, televisions, and radio sets served an industry enjoying constant innovation and new product demand in the late twentieth century. By the first decade of the 2000s, the market for these products was dominated by a major shift to digital technology. While this development clearly presented vast new market openings, it also posed challenges. Convincing a market highly saturated with its products to upgrade to the latest technology called for aggressive marketing strategies and value-added services. Wholesalers aided these strategies with services and technological sophistication of their own in order to most adeptly meet their manufacturers' and retailers' needs in the quick-paced marketplace.

Unit shipments of direct-to-home satellite systems grew from 6.9 million in 2002 to approximately 7.8 million in 2004. In 2003 sales of flat-panel televisions skyrocketed, registering triple-digit growth in the first half of the year. Growth in the market continued as sales units more than doubled from 2005 (4.6 million units) to 2006 (10.2 million). Liquid-crystal display (LCD) and plasma TVs emitted less radiation and reflected less glare than traditional cathode ray tube (CRT) TVs. By late 2005, flat panel TVs represented 36 percent of all digital television sales. Despite a weak overall economy in 2009, 7.2 million flat panel TVs were sold in the first quarter, an increase of 23 percent over the first quarter of 2008.

The advent of digital television broadcasts in November 1998 was good for the consumer electronics industry. The Consumer Electronics Association (CEA) reported that about 30 percent of U.S. households had purchased digital television sets by the end of 2006, and those sales outpaced analog set sales by 66 percent, which fueled sales in the consumer electronics industry. The transition to digital was even considered too important to relegate solely to market forces. The Federal Communications Commission (FCC) considered regulations requiring manufacturers of analog television sets to install tuners capable of receiving DTV signals, making them digital-ready, in an effort to speed the digital conversion. The Council of Economic Advisors (CEA) sued the FCC, arguing that the cost to manufacturers and consumers outweighed the benefits of an across-the-board digital conversion.

It was clear, however, that by the middle of the first decade of the 2000s, the end of analog TV was nearing. In 2002 the FCC ruled that half of all 36-inch analog televisions had to be DTV-compatible by July 2004 and include DTV tuners a year later, while smaller analog televisions had to be DTV-ready by mid-2007. All analog broadcasts were to end by February 17, 2009, as established by the DTV Act in 2005. The act also specified that households could apply for two coupons worth $40 apiece to cover potential costs of purchasing a digital-to-analog converter box.

Industry insiders worried that the rollout of digital technology would adversely affect sales in categories that had not fully transformed from analog technology. While these fears were borne out in many cases, some analog industry categories were hanging on into the middle of the first decade of the 2000s. The CEA reported that combination television/videocassette recorder sales increased to 4.87 million units in 2002, up from 4.63 million units the year before, although falling prices led to a drop in total sales from $790 million to $737 million. The number of units dropped to 3.3 million in 2005. Sales of projection televisions continued to fall from their peak of 1.22 million units and $1.48 billion in sales in 2000 to 681,000 units and $733 million in sales in 2002. By 2006 the number of units had dwindled to 5,000 units and $3 million in sales. Videocassette recorders registered one of the most severe declines, from 23.1 million units in 2001 to 2.2 million in 2004.

In the audio segment, overall unit shipments fell 19 percent in 2002, and an additional 4.3 percent in 2003. Industry observers attributed this slide to a lackluster economy and to the encroachment of new forms of audio consumption, particularly via the Internet and computer-based audio listening. The tide was stemmed somewhat by the rise of MP3 players, which enjoyed double-digit growth in the early years of the first decade of the 2000s, but shipments of CD players fell from nearly 43 million in 2002 to a predicted 34 million in 2004.

Shipments of major household appliances, such as refrigerators, ovens, and laundry equipment, tend to track the performance of the overall U.S. economy. In particular, new housing starts were a key indicator for performance in this category and these numbers rose steadily in the early years of the first decade of the 2000s from 1.7 million housing starts in 2002 to 2.1 million in 2005. This led to extremely modest growth in the early years of the first decade of the 2000s, but most major categories continued to grow slightly. Between 2002 and 2004, all the major categories in the major-appliance sector, which includes dishwashers, disposers, electric and gas ranges, freezers, refrigerators, washers, and dryers, had growth in shipments of around 2 percent annually. However, 2005 figures showed only a slight increase of 0.3 percent.

According to the U.S. Census Bureau, in 2009, 3,100 establishments operated in this industry, with 33 specialties led by the television segment with approximately $28.6 billion in sales, followed by radios, stereos, tape and CD players at $13.6 billion, and household refrigerators and freezers with nearly $8 billion in sales. There were 49,195 employees earning an annual salary of more than $2.75 billion. The market remained relatively unconsolidated as nearly 67 percent of all electrical appliance, television, and radio wholesale distributors employed fewer than 20 people.

By the beginning of the 2010s, the electrical appliances segment of the industry was marked by a constant influx of new technology. From refrigerators that could take stock of what was inside and send a grocery list to the store, to washers and dryers that could be turned on and off via a cell phone, the market was characterized by products that were continually being more integrated with other technology, including the Internet. The other segments of this industry were affected by even more rapid changes. Revolutionized by the advent of the Internet and then the iPod, the audio electronics industry served a new generation of youth, some of whom had never even heard of a "radio set" or a "videocassette player.". The videocassette player, DVD player, and, the latest movie device, the Blu-Ray player, were all no match for streaming video from the Internet. Consumers could download movies, music, and TV shows in seconds via their iPod. The audio segment of the industry was dominated by Apple, maker of the iPod, which at the end of the first decade of the 2000s controlled more than 70 percent of the market for digital music players. In addition, analog televisions had been completely replaced with digital versions, featuring flat screens and high-definition quality. The television wholesale segment also competed with computers, as Internet TV became increasingly popular.

Although the economic recession at the end of the first decade of the 2000s slowed sales in this industry somewhat, by 2010 this sector of wholesaling in the United States started to see a recovery. In 2011 the overall U.S. electrical and electronic goods wholesaling industry was worth about $400 billion, according to the U.S. Census Bureau.

The industry's most significant challenge, according to a 2011 report by IBISWorld, was the increasing use by manufacturers of offshore production in countries where labor is less expensive, such as China. According to the report, "U.S. electronics manufacturers' offshoring of production ... cuts wholesalers out of electronics manufacturers' localized supply chain." Nevertheless, "increased consumer spending and disposable income will promote industry demand through 2016."

The industry's biggest players were predominantly based in Asia, and U.S. companies struggled to maintain a share of the market. Apple Inc., in Cupertino, California, was the leader in the industry in the United States. Its sales mushroomed with the introduction of such products as the iPhone, iPod, and iPad. With 63,300 employees, Apple had sales of $108.2 billion in 2011. Another major player was Sony Electronics Inc. of San Diego, California, with 26,150 employees and $2.7 billion in sales in 2011. Sony was a division of Tokyo-based Sony Corp., which reported $86.6 billion in revenues that year. Philips Electronics North America Corp., in Andover, Massachusetts and an arm of Royal Philips in the Netherlands, reported 2011 sales of $9824 million in 2011 with 12,500 employees.

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News and information about Electrical Appliances, Television and Radio Sets

P/$ Rate Closes at P48.695/$ 1
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