SIC 5731 Radio, Television, Consumer Electronics, and Music Stores

 
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SIC 5731

This category encompasses establishments primarily engaged in the retail sale of radios, television sets, record players, stereo equipment, sound reproducing equipment, and other consumer audio and video electronics equipment (including automotive). Such establishments may also sell additional product lines, such as household appliances; computers, computer peripheral equipment, and software; musical instruments; or records and prerecorded tapes. Establishments in this industry may perform incidental installation and repair work on radios, television sets, and other consumer electronic equipment. Establishments primarily engaged in the installation and repair of these products are classified in SIC 7622: Radio and Television Repair Shops. Establishments primarily engaged in the retail sale of computer equipment are classified in SIC 5734: Computer and Computer Software Stores, and those selling electronic toys are classified in SIC 5945: Hobby, Toy, and Game Shops.

NAICS CODE(S)

443112

Radio, Television, and Other Electronic Stores

441310

Automotive Parts and Accessories Stores

INDUSTRY SNAPSHOT

In 2003, following years of disappointing retail sales across most industries, the economy began to pick up and consumers returned to stores. That year, this industry topped $100 billion for the first time ever, and in 2004, the value was about $113.5 billion. According to the Consumer Electronic Association (CEA), the sales of consumer electronics continued to grow by leaps and bounds, and was expected to reach $125.7 billion in 2005. Although consumer electronic giants Best Buy and Circuit City retained their dominant market shares, high-end consumer merchants were also seeing renewed sales.

According to the Consumer Electronic Association (CEA), digital products have led the industry's growth, with digital television at the forefront. As prices dropped for digital products, more consumers entered the market, increasing demand for more sophisticated electronic equipment. Overall, the market for consumer electronics is predicted to rely heavily on new innovations and technology. As market saturation of electronic items rises, innovations are expected to fuel consumer purchases of improved equipment and replacement units.

ORGANIZATION AND STRUCTURE

Many radio, television, consumer electronics, and music stores were chain stores in the late 1990s. This structure enabled larger companies to purchase equipment at a sharp discount and to pass those savings along to the consumer. Chain stores have become more prevalent in the industry because smaller stores have found it increasingly difficult to compete with the chains' low prices.

One major change in the retailing strategy of consumer electronics stores has been a shift toward scrambled merchandising. This trend has been evolving since the 1970s and refers to the growing tendency for stores to become larger and to carry more diverse product lines. In 1998, there was 20 square feet of retail space per person in the United States. Most retailers expanded their merchandise lines to fill this space, and the superstore became prevalent in the industry. Radio, television, and consumer electronics stores fit into this niche nicely, because their broad scope encompassed many aspects of consumer product lines. In addition to providing a wide variety of products, most large retail outlets are able to offer their goods at substantially lower prices. Such discounters reflect changes in consumer buying patterns and the need to adapt to the reality that adults between the age of 40 and 50, the largest single group of consumers, are making purchases to replace current equipment. Consequently, as middle-aged Americans begin to save money and are more hesitant to purchase on credit, they are purchasing fewer expensive items.

Superstores typically carry an inventory of 40,000 items, compared with the 25,000 items that are carried by an average store. Because chain stores and superstores purchase such large quantities of products for their stores, manufacturers offer them substantial discounts on merchandise. For this reason, chains and superstores are able to sell their merchandise to consumers at prices substantially lower than those found in small stores. Additionally, the largest chains are cutting back on sales staffs and stores display merchandise in a warehouse style without expensive displays.

BACKGROUND AND DEVELOPMENT

The Industrial Revolution that began in the late 1700s was the genesis of modern retailing. The mass production of saleable items began as factories started to manufacture formerly handcrafted goods. The western frontier and the movement of railroads also created a demand for goods, and marketplaces helped to distribute merchandise to remote locations. The general store was the first outlet that offered a variety of merchandise. As retail became more sophisticated in the mid-nineteenth century, the general store was replaced by specialty stores grouped together. The chain store, a configuration utilized by most modern consumer electronics outlets, had its beginnings in the late nineteenth century when the concept was pioneered by such retailers as F. W. Woolworth.

The discount store became popular when the population shifted from cities to the suburbs after the end of World War II. Demand for household items increased, and new homeowners were anxious to purchase goods at less-than-retail prices. At the same time, the trend toward reducing customer services also developed. Discount stores kept their costs low by maintaining low-rent facilities and a minimum sales staff. Suburban consumers were receptive to this opportunity to save money, and discount stores grew substantially during...

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