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Retailers Spend Holiday Chasing Plasma

1/16/2006 02:00:00 AM Eastern

A strong holiday selling season was buoyed by GPS navigation, digital audio players, digital cameras and flat-panel LCD and plasma television, despite extremely tight supplies in flat panel.

That was the word according to executives assembled for TWICE's annual International CES Retail Roundtable, moderated by senior editor Alan Wolf.

The panel noted that a fourth quarter spent blowing through scarce flat-panel supplies has bolstered January orders. “Many of our dealers are happy that the big deals didn't happen in December because now January sales are very strong,” said Richard Glikes, Home Theater Specialists of America executive director.

Dealers with in-home installation services were especially well-positioned to thrive in the post-Christmas environment, said Joe McGuire, Tweeter president/CEO. Indeed, retailers were unanimous about the need to build out their service offerings as hardware margins erode even though some warned that labor costs do not offer the margin cushion many assume.

The paucity of plasma did occasion some moves to third-tier brands, dealers said, but to a point.

“We found that at around 20 inches and under $2,000, consumers were willing to buy another [flat-panel] brand,” said Dan Schwab, marketing VP, D&H Distributing.

Dealers were also sanguine about Black Friday, celebrating it less as a retail blood sport than as a “cultural event.” Black Friday is really unique unto itself, said Phil Jacobs, CompUSA chief marketing officer. “You don't need to treat Christmas shoppers like Black Friday shoppers — it's two different customers.”

Mike Vitelli, consumer electronics and product management VP, Best Buy, attributed the upsurge in television sales to the fact that for the first time in the industry's history, “Women are excited about television.”

The enthusiasm with which retailers chased fleeting stocks of high-definition flat-screen plasma and LCD TVs stood in stark contrast to the sense of frustration, dread and foreboding when the discussion turned to the arrival of high-definition Blu-ray and HD DVD discs. Dealers were unanimous in decrying the standoff which will bring two rival formats, and a train of confusion, into their stores.

“It's a mess, a very unfortunate situation,” Vitelli said. D&H's Schwab claimed the format war “hurts everyone in this room, and it hurts consumers.”

“It's criminal,” seconded McGuire. “As retailers, we are supposed to help our customers and this format war puts us in the position of not being able to fulfill our mission. When customers come in and ask, 'What format should I buy?' we have to honestly answer, 'I don't know.'”

Despite the lamentations, dealers acknowledged they would likely carry both products and let the market sort it out. But John Flanner, president of Flanner Audio & Video and PARA president, cautioned that video-on-demand and downloadable content could make the format war irrelevant. “You don't need [high-definition content] on disc. We could just jump to the next delivery system.”

NPD Techworld's industry analysis director Ross Rubin agreed, warning that “Consumers could just sit out the format wars because they're satisfied with DVD.”

If the format wars aren't headache enough, Vitelli predicted the next “layer of digital confusion” will be added by the digital transition, when retailers are forced to fully explain the many “flavors” of HD television.

(A complete synopsis of the TWICE Retail Executive Roundtable will appear in the Feb. 27 issue of TWICE.)

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