Wired nation

Factory sales of MP3 players will rise from $424 million in 2003 to nearly $6 billion in 2007, according to projected sales figures compiled by the U.S. Census Bureau. Additionally, sales of digital television sets and monitors for the same period are estimated to increase from $8.7 billion to $26.3 billion.

Products are not the only things going digital; the process for acquiring them is as well. Of the $3.7 trillion in retail sales in 2005, $93 billion, or 2.5 percent, were recorded as e-commerce sales.

In 2005, electronic shopping and mail-order houses accounted for 70 percent ($65 billion) of e-commerce sales, most notably from computer hardware (14 percent), clothing (12 percent), and drugs and beauty aids (10 percent). Motor vehicle and parts dealers made up another 18 percent of e-commerce sales

But while online retail will likely continue to grow, the most successful purveyors of digital products place emphasis on the quality of both their online and brick-and-mortar shop place, said Howard Davidowitz, chairman, Davidowitz & Associates Inc., a national retail consulting and investment banking firm headquartered in New York City.

He pointed to both the Apple Store and Best Buy as examples of retailers whose actual physical stores are thriving.

One reason for that is those stores merge product inventory with superior service and an aesthetically pleasing atmosphere.

“You look at Best Buy, they have the Geek Squad, they have a knowledgeable staff,” he said.

He said the Apple Store”™s design is so pleasing to the eye, that it almost entices people to come inside solely for that reason alone. The Apple Store also generally has quality service, he said.

Both Best Buy and the Apple Store are among the most successful retail stores in the country.

Best Buy does around $900 of sales per square foot of store space, while the Apple Store does a whopping $4,000, according to a report issued by Sanford Bernstein and Co.

Contrast that with companies like Radio Shack, said Davidowitz, which closed 600 stores this year, or Tweeter, which is now bankrupt.

Both of those are examples of companies that don”™t offer much more outside of the products they are selling, he said.

“If an Apple Store and a Radio Shack are next to one another, which one would you be more inclined to go in?” said Davidowitz.

But the fact that both Radio Shack and Tweeter dominated the marketplace not too long ago shows how quickly things can change, even for a giant like Apple, he said.
When a company”™s primary product is technology-based, “they have to keep moving ahead,” said Davidowitz.

The Census Bureau report also offers data on the rise of online news sources.

Between 2004 and 2005, Internet publishing and broadcasting operating revenue increased by 19 percent. Revenue from online advertising space increased by 29 percent.

Meanwhile, the number of daily newspapers continued to decline, from 1,611 in 1990 to 1,437 in 2006. Circulation fell from 62.3 million subscribers to 52.3 million during that period, the report states.