Back-Lit LED Seen As Salvation For Lower TV Prices

By Alan Wolf -- TWICE, 6/15/2009

NEW YORK — Dealers are looking to 240Hz LED TVs to help counter dramatically lower average selling prices (ASPs) for flat-panel TVs.

According to Dennis May, president, COO and CEO-elect of hhgregg, ASPs have fallen 20 percent to 24 percent industrywide on flat-panel TVs since the fall, causing the company's unit sales to outpace dollar volume.

That was certainly the case at Costco, where TV unit sales were up 48 percent in May while dollar volume fell 4 percent, owing to a 39 percent drop in ASPs year over year, the warehouse club said.

To counter the declines, dealers are up-selling commodity-minded customers on the higher contrast ratios and more fluid motion of LCDs with LED backlighting and 240Hz refresh rates, which carry heftier price points and margins.

“LED could help stabilize the decline in ASPs,” May said during a conference call earlier this month, “and will be much more impactful than 1080p or 120Hz.”

“We're very excited about LED,” echoed Tim Frank, the newly seated CEO of Conn's, who told analysts during an earnings calls that the more fully featured sets will help stem price compression in larger screen sizes. The 240Hz LED TVs will also help the company compensate for rapid declines in rear-projection models.

“People like things big in Texas,” Frank said of large-screen microdisplays. Nevertheless, the rear-projection category “declined at a much faster rate than we would have hoped.”

Frank said the industry “continues to see tight TV supply,” which could help stabilize pricing, while hhgregg's May noted that ASPs remained relatively flat during the January to April period while demand for 32-inch and 50-inch-plus screen sizes has grown.

Both companies also reported an uptick in business last month following a fallow March and April. “Traffic improved through May overall,” May said, while Conn's reported a 6.4 percent increase in CE sales last month. Nevertheless, Conn's said the industry still faces headwinds from a challenging economy, while hhgregg is planning for soft consumer demand through 2010.