Industry Showed Restraint On Black Friday
by Alan Wolf -- TWICE, 11/26/2007
New York — Black Friday’s CE promotions were relatively rational compared with last year, when plummeting prices on flat-panel TVs obliterated margins and sent retailers like Tweeter, Circuit City and CompUSA reeling.
This time around, older models, 720p TVs and private-label products bore the brunt of the early-bird discounting, which should bode well for dealers’ bottom lines.
“The promotions were not as aggressive as last year,” observed Gregg Richard, president of P.C. Richard & Son, although shoppers remained undaunted. “The customer still came out and there was lots of excitement around CE.”
Dennis May, president/COO of hhgregg, concurred. Despite some programmed price movement from manufacturers, “[holiday] pricing is a little more stable, a little more rational,” he told analysts during a recent investors’ call.
Banc of America Securities retail analyst David Strasser observed that Black Friday pricing was “generally tame vs. last year,” with sales and margins holding up well. Among the specialty chains, “Best Buy appeared less aggressive than we would have thought,” employing its private-label Insignia and Dynex brands to drive opening price points, while Circuit City was “aggressive, but not to the extent that it upset the dynamic of the promotional environment,” he said in a research note.
“Things were a little bit tamer and not quite as excessive,” agreed Stephen Baker, industry analysis VP for The NPD Group. But then again, “There wasn’t as much to cut because we already cut prices a lot,” he said, particularly in categories like digital cameras where average selling prices on point-and-shoot models had already fallen below the $200 threshold.
“It doesn’t get everyone all juiced up,” he said.
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