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iSuppli: LCD TV Sales Dip As Prices Rise

8/18/2010 10:22:08 AM Eastern

El Segundo,
Calif., - A recent market study by iSuppli
found prices of LCD TVs in the United States surged upward in July due to the
introduction of new, more advanced models and reduced promotional activity on
older goods.

 The average retail price in July for an LCD TV
in the United States was $1,136, up 7.2 percent from $1,060 in June, the
highest rate of increase in at least a year, iSuppli said.

The price also was
up 2.8 percent from $1,104 in July 2009.

 "While pricing often oscillates on a
month-to-month basis, a year-over-year increase is unusual in the LCD TV
market, where annual price erosion rules due to falling panel costs and
escalating competition," said Riddhi Patel, television systems director at
iSuppli.

Patel said that
after small sequential declines in May and June, "average prices for LCD-TVs
increased in July with the arrival of a flood of new sets."

More than 20 new
models were added to each of the size ranges, with the majority of the models
adding advanced feature sets and higher price points.

"With these new
models available, sellers cut back on deals designed to stimulate the sales of
older LCD TVs and reverted back to the regular prices," according to Patel.

Among the key new
features introduced were LED backlighting systems, 3D display capability,
higher refresh rates (120Hz and 240Hz), and built-in Internet capability,
iSuppli said.

LCD TV price
trends in July varied among different retailer types, according to iSuppli.
Prices at mass merchants and club stores, for instance, declined on average on
a sequential basis, while those at consumer electronics and online retailers
saw increases. The price changes could be attributed to the brand and product
mix at each retailer.

Some of the higher
average price increases were observed at retailers -- including Amazon, Best
Buy, Costco and Crutchfield, each of which increased the number of step-up and
premium models in their sales mix, iSuppli said.

In comparison,
stores like Vann's, hhgregg and other regional chains saw a slight price
decline, sticking with a mix of new and older models, and by placing older
models on sale.

Patel cited
existing economic uncertainty and caution among consumers as factors in the demand
changes among mass merchandisers and club stores.

Promotions at such
stores have been slower than the prior months, adding to their woes, Patel
added.

"Nonetheless,
iSuppli expects retailers to become aggressive once again with their promotions
in the upcoming months in order to fuel demand," she continued.

Overall, the U.S.
LCD TV market is experiencing a softening in sales due to factors including
seasonality, increasing prices for some key sizes and a slowdown in consumer
uptake given the economic uncertainty, iSuppli said.

In July, retail
inventories rose and stood at six weeks to nine weeks on average -- considered
somewhat high for this time of the year. Brands and retailers, in order to fuel
demand and the replacement cycle, will have to come up with aggressive
promotions for the rest of the third quarter to generate excitement for the
upcoming holiday season.

 

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