More Room For Growth For TV Accessories Sales: NPD

By Staff On Apr 7 2008 - 6:00am

As digital TV prices have dropped in the run-up to the analog cutoff, many retailers have turned a fresh eye to accessories sales to bolster revenues and inject some hard-to-find margin into TV sales. According to a new report, What's in the TV Market Basket, from The NPD Group, some consumers have responded, but there's still more room for revenue to rise.

Only 30 percent of consumers surveyed purchased something related to their TV purchase at the time they purchased their TV. Another 40 percent made additional related purchases at a later time. On average, consumers who purchased a TV and additional items at the same time spent more than consumers who made the additional purchases at a later time, $470 and $283 respectively.

HDMI cables, extended warranties and entertainment cabinets were among the top three additional items consumers purchased, both at the time they purchased their TV and when they went back to make an additional purchase.

Thinner TVs with larger screens have led many consumers to opt for wall mounts for their new TVs, with 19 percent of LCD TV purchasers picking one up with their TV and 20 percent of plasma buyers.

Entertainment centers were a big sell with rear-projection TV buyers, but those sales may start to fall off as rear-projection TV sales continue to drop, according to NPD.

As consumers invest in new televisions, adding A/V components becomes a real consideration to enhance the home theater experience. Home theater systems were the most purchased A/V component among all TV purchasers, 13 percent. Plasma TV buyers had the highest purchase rate at 19 percent.

While installation, setup and delivery represent no inventory cost and high margins for retailer, according to the report, very few consumers are actually purchasing those services. Of the 30 percent who made additional purchases with their TV, only 9 percent purchased installation/setup for the TV and any related devices. The number drops by almost half, to 5 percent, for consumers who just wanted help installing their TV. Delivery was only purchased by 7 percent of consumers. Among consumers who went back to purchase the installation, that number drops to 3 percent for both just TV installation and TV and component installation.

"The more that retailers can get a consumer to buy at the initial sale, the better chance they will have to sell them the support they need to get their new home entertainment center up and running at optimum levels," said Ross Rubin NPD's industry analysis director. "With additional A/V components and accessories, retailers offer the parts of the solution. With installations, they bring the solution together."