Mixed Views On Severity Of Q4 Price Cuts
-- TWICE, 10/26/2009
TWICE: Will there be deeper price cuts than usual in the fourth quarter to generate traffic? Which categories may get hit hardest?
Mark Feinberg, ADI: Although there probably won't be any dramatic price cuts as in previous years, the trend will continue, and entry-level flat panel and Blu-ray products will probably experience price cuts and be considered loss leaders. We do hope retailers will be able to strike a balance between driving traffic with promos, and trying to recover lost revenue from a lackluster year.
Bill Stewart, PETRA: We don't anticipate any drastic price cuts for Q4. As always, everyone will try to stay competitive, and Petra is fully aware of this. We immediately pass any price cuts that come our way straight to the retailers. Plus, we promise to beat any of our competitors' advertised prices, so our customers know they can count on us for products that will help them stay competitive.
David Kaplan, DDG: Our channel does not play the “Black Friday” game in the same way as regular retail, but we are affected by the crazy pricing and deals. Top line without bottom line is meaningless. And, yes, I expect the usual hot deals and crazy pricing in the newspaper and online, especially on entry-level product. Not worse than last year, just the same insanity. For example, while I'm expecting spot shortages in 32-inch screen sizes, we'll probably also see inordinately aggressive pricing. And Blu-ray — this will be the season of the Blu-ray bundle, and we'll see pricing as low as $99.
Mark Gustavson, WYNIT: Reliable intelligence indicates that consumers are not holding on to reserves of disposable income while they wait for fire-sale prices, as they did through the first half of the year.
The challenge is to get Americans facing uncertain prospects to buy, so we can expect loss-leaders in an effort to generate traffic. For consumers with means, the bigger issue is how much they will spend. No one is sure what's left in the family budgets of those who participated in the “Cash for Clunkers” [program].
No one really knows what additional government stimulus programs may be coming or when. A “Cash for Worn-Out Major Appliances”-type program in Q4 would cause significant downside for CE products, while a “Cash for Energy Star Compliance” program would generate upside sales.
Doug Robison, DSI Systems: There is no question that Q4 will be bloody from a pricing perspective. I think it will be worse than ever, in terms of the leader, name brand product that is out there. That is why the independent has to have a solid story around selling technology and service. The independent must be the technology retail destination in his community and be able to up-sell the consumer to a product that fits his or her needs while providing the retailer with a better margin. And they need to provide outstanding service to keep the consumer coming back. The same goes for the distributor; it is important that we provide value-added services for the retailer and help them be successful.
Rob Eby, D&H Distributing: I think price cuts have already started. This is due to inventory challenges back in the summer. Because summer sales were on a decline, excessive inventory created lower price points in order to move product. Two different manufacturers have already started pulling back on their cuts because they were implemented early. This means that we won't see severe drops, but there will be another round of adjustments as we move through Q4. Price declines in the LCD TV category are one example.
Fred Towns, New Age Electronics: Expect to see incredible deals around televisions, especially 720p HDTV and Blu-ray — players, recorders and media. Netbooks have been holding great price points and value and will have some exciting promotions for Q4 as well.
Wally Whinna, AVAD: As one of the leading CE categories for the next quarter, video will be the most visible arena for price competition. [Pricing] will depend on supply vs. demand and the overall retail environment during the holiday season.
