White Goods versus Consumer Electronics . . .

Sunday, September 14, 2003 | 08:38 PM

After three years in the new house, we decide to refinish the kitchen (by new, I mean new to us -- it’s nearly 100 years old).

We meet with Steve the contractor. (We like Steve in part ‘cause he pointed us to an authentic dry rub BBQ joint with a real smoker on the premises -- a true rarity on Long Island). Steve sends us out to look at kitchen appliances. Of course, their prices annoy me no end; Lets face it, these are essentially plastic and steel boxes: one that gets hot water piped in and out, another that has gas piped in and ignited, and the last one is merely an insulated box with a compressor.

I grok the technology behind a 50 inch plasma screen TV, and can see why they cost $10,000 -- and I'm willing to pay that. I cannot for the life of me figure out why a large metal box with the word “Sub-Zero” on it costs the same amount to merely stand there and stay cold.

But I digress.

What was interesting from a sector viewpoint was the following: At the Home Depot, the entire Kitchen Design / Appliance section is closed for expansion and renovations. We go through the temp set up, but it's really a make shift operation until the expansion is done.

We then go to P.C. Richards, a well established New York area PC/Audio/Video/White Goods store (they have 30-40 stores in the family owned chain). There’s one around the corner from us; we hadn’t been in since they finished a full renovation a few months ago themselves.

The store was formerly dominated by PCs and Big Screen TVs and sound rooms. Now, the front of the store has been turned into a high end model kitchen. The entire store has been opened up: Fully half of it is now white goods: Refrigerators and Stoves and Dishwashers and Microwave Ovens and Washers and Dryers and Garbage disposal. Not much of an audio display, decent selection of plasma TVs.

This is now an official coincidence. I am well aware of the danger of relying on anecdotal evidence as an investment strategy, but feel compelled to at least observe the following: Neither of these outfits are dumb retailers; Home Depot invented their category, while P.C. Richards has been around since 1909.

Consumer electronics as a category of discretionary spending has likely seen its best days. The PC upgrade cycle is no more; It's now a replacement cycle. DVDs are fully integrated into the consumer market; What home doesn't have wireless phones and answering machines?

I wonder how much legs home sales and refinancing have, and how much further the remodelling/refurbishing of the suburban American can go.

Sunday, September 14, 2003 | 08:38 PM | Permalink | Comments (0) | TrackBack (0)
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