By Lisa Johnston
New products on display at the American International Toy Fair, held in N
TWICE: Why has the consumer seemingly chosen LCD over plasma?
Douglas Moore, Sears Holdings: Actually each one represents value and performance in its own way, and Sears is technology agnostic when it comes to that.
It's sort of personal preference. One is better for sports, one is better for daylight vs. nighttime, all those kinds of considerations. At the end of the day, anything that's 1080p or even 720p is a great picture. For people that are entering that market for the first or second television in their house, it's just a great value.
The key for us is no different than for the other retailers in the room. We've got to add the accessories, services and warranties in order to make this thing work because of the pricing pressures that we felt. Honestly, the pricing horse is out of the barn, and I don't ever see it going back in. The idea that somebody who needs to make a sale would keep their prices up is probably not going to happen. That's the world we've been in, and unfortunately that's the world we're going to be in as we ride this thing out.
I think there will be some pressure on availability of different screen sizes as we get into the year. Certainly the hits, misses and guesses as to what people want in what size and which technology are always going to leave extra product on the table that needs to be sold after the season.
But it's all great technology and we remain very bullish about TV generally. We're a smaller player. We're not really in the Top Three with this. But we're enjoying being back in the game and being competitive with our 930 Sears outlets and our 1,388 Kmart stores. I see a decent year at obviously reduced ASPs [average selling prices] one more time, and that hasn't killed a lot of other businesses in our industry over the years. Every product we've ever sold has basically started up here and ended up down here, although maybe not as rapidly.
TWICE: 1080p was supposed to buy everyone a little more time.
Steve Caldero, Ken Crane's: The "P" doesn't stand for profit. 1080p originally was introduced as the step-up product for the more aspiring, more discerning viewer, but now it's an entry ticket. If you don't have it you're not even in the game.
Irynne MacKay, Circuit City: From our standpoint, I couldn't agree more with Doug in that LCD vs. plasma, 720 vs. 1080, really is about customer education, making sure that first-time buyers and second-time buyers really understand what is out there in terms of technology.
TWICE: Are consumers responding to 1080p?
David Smith, Ultimate Electronics: Yes, we certainly see it with our customers.
To a large degree we are a little bit product agnostic as well. We want to sell them the product that's right for them. In our case, consumers come to us for that consultative sale. It's a place where we are to some degree protected in terms of garnering higher margins by larger screen sizes, 1080p, leading-edge technologies like OLED, and things of that nature.
But at the end of the day the TV is a traffic driver, and for us it's less about the TV and it's more about the solution-based selling that our sales force is trained to do. As we drive traffic to TV, we work very hard to attach all of the ancillary products, warranties, and audio and try to sell more of a complete experience.
TWICE: Is flat panel still a growth category?
Smith: I believe so. There's still big demand and more to come. Most of us have multiple TVs in our homes. If you look at tube TVs, you may have five or six including bedrooms and offices. We're a long way from finding that level of saturation in terms of high-def TVs. We certainly don't have high-def TVs in every household yet, and where we do we don't necessarily have them in multiple rooms. I think there's quite a bit of pent-up demand, and hopefully that's not just retail optimism. It seems that we continue to see the growth year after year.
Dan Schwab, D&H Distributing: With the digital TV transition, what is the consumer going to do with that white TV sitting in their kitchen? What are they going to do with the TVs in the kids' bedrooms? People only made the transition to digital with the primary TV, which they put in the living room. Maybe now they've put one in their bedroom as well, but I think there is still a tremendous install base. That is the benefit for all of us over the next five years. Despite the teetering ASPs there will be continued opportunity to grow with the amount of units we're all going to be moving through.
Noah Herschman, Amazon.com: Also, we don't know the length of the replacement cycle right now. You can't really compare a flat-panel TV with an iPod, but as an example I will. In terms of the iPod replacement cycle, right now there have been so many sold, a hundred million or so, and they're still selling a lot. They're not really selling to first-time buyers of MP3s. They're selling to people who just want the latest and greatest thing.
We like to think a lot of them shop with us, but there are a lot of early-adopter customers out there who want to buy the next great thing. That's what we're all still looking for. I don't see that person going away anytime soon, especially with technology as exciting as it is today. Just when you think televisions can't get any better they do, by over a magnitude.
That is a positive thing, and there's going to be a tighter replacement cycle with higher-technology products than there has been in the past.
TWICE: What happens to the tier-three vendors now that the name-brand guys have narrowed the price delta?
Edward Maloney, Cowboy Maloney's Electric City: I think there's always going to be need for an entry-level piece. Somebody is going to do it. At the NATM buying group, we're talking about trying to find somebody that we can depend on, and that may be hard to do. It may be impossible to do, but that's our goal — to try to find somebody we can partner with at the entry level on flat panels.
Dave Workman, PRO Group: With 70 brands of televisions out there in the marketplace you would expect some consolidation in the business, in both branded and less-branded product. Fujitsu exited the business, and another name came off the table. When you look at the tier three products, you do get some names that have achieved a certain critical mass like Vizio that will probably remain and consolidate even more of that price position. I don't think opening price-point products will ever go away, but I think you have to return to some normalcy with the number of brands that are in the marketplace vs. what it has been in the past.
Fred Towns, New Age Electronics: There is another point too, that we focus so much on the 42- to 50-inch screen sizes. When you start to look at the second and third sets that go in other rooms, rooms where you don't need a 42-inch TV, the third-tier brands are probably going to be very smart about hitting price points where you might consider switching out a tube set for a panel. The smaller screen size is going to be important in those third-tier brands to fit that application. It could be an extra bedroom or somewhere you just have it set up for convenience. I think people will look at it and figure, well, if I'm going to get a digital converter box to be able to use it, why don't I just look at putting an inexpensive panel in there? So I think there will be a need in the other rooms of the house.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.