NEW YORK – Leading TV industry analysts predict this year’s over-arching theme for Black Friday will be “big and cheap,” setting the stage for a wave of lesserfeatured larger-screen TV sales in 2013.
Paul Gagnon, NPD DisplaySearch North America TV research director, said that contrary to other regions of the world, U.S. consumers will continue to gravitate to the biggest screen sizes they can afford at the expense of the bells and whistles like 3D and local dimming LED models.
He said LED-based LCD TVs will be much more affordable this year, especially direct-lit LED models, which will have premiums of less than 10 percent over CCFL in most cases.
“Other features like 3D and smart TV will not be highlighted this year as the uptake has been slow, so the focus shifts to big and cheap for the holiday,” he said.
Although some of the urgency ignited by past Black Fridays may have faded for the TV category, it remains a critical period for companies to “make their annual sales targets even if they miss on profits. However, it continues to reinforce the behavior among consumers to wait for the biggest discounts at the end of the year, which is very challenging on profitability,” he added.
Tamaryn Pratt, Quixel Research principal, said she is optimistic that the industry is in for brisk TV buying activity the day after Thanksgiving, adding it will be “a 1 million unit weekend for at least one manufacturer” and “overall sales for Q4 have nudged up every year and this year around 36 percent or more.”
“Consumer confidence is up, prices are right, and frankly the industry has trained them that the holidays are the time to buy. The layaway programs are also helping.”
Gagnon also pointed out that “consumers have gone to the sidelines for a few months in anticipation of the holiday shopping season. As a result, I expect demand levels to be similar to a year ago, although shipments of TVs will likely be down a few percent year to year because of an abnormally high level of shipments last year in the fourth quarter.”
But Ed Border, IHS iSuppli TV technology analyst, is calling for promotional offers to be somewhat tempered from a year ago.
“Promotions won’t be quite as extreme as last year, at least not on a widespread basis,” Border said, echoing a common theme with the analysts. “Last year was a pretty dynamic promotional environment.”
He added, “For some sizes, due to tightness of supply, panel prices are not much lower than at this time last year, so it would be difficult from a margin standpoint to offer dramatically different prices on 32-, 40- and 42-inches,” he continued. “That said, there will be lots of good promotions on sets below $500 in up to 50-inch screen sizes, and below $1,000 for sizes up to 60 inches.”
Much of the Black Friday buzz this year is likely to come from large-screen-size TVs, noted Quixel’s Pratt.
“Big screen is back. Last year manufacturers just dabbled with the dramatic pricing for 60 and 65 inches, but this year consumers will have plenty of options for 60 inches below the $1,000 threshold,” she offered. “It is pretty clear that larger models are now where the action is when you look at the large-screen assortments that are already in place at the mass merchants in October. At the larger Target [locations], for example, approximately 75 percent of their wall is 42- inch and above, while the smaller models — and even some for 42-inch — are almost jammed in any spot on the end of the isle they can put them. Multiple 60-inch-plus flat-TV models on their wall just a year ago would be have been almost comical.”
According IHS’s Border, most of the Japanese brands are not expected to be too aggressive this year.
“We expect the Japanese brands to be conservative on promotions due to profit concerns,” Border said. “The Korean brands will also be focused on profits, but may react to other promotions more aggressively. With that, there is probably a decent amount of opportunity for the other brands in the market.”
Pratt said, “LG had a breakout Black Friday last year, and we are expecting they will have another strong holiday. Samsung, Sharp and Vizio will lead in a variety of screen sizes, while Westinghouse and RCA will drive strong volume with specific promotional models. Funai will continue to be significant players in the [open price point] space.”
Border said, “The big promotions so far have been geared up around the 32-, 42- and 47-screen sizes, reflecting that in the current state of the economy retailers are pushing towards more affordable screen sizes and devices. With that in mind, it is likely that the familiar faces will continue to dominate the manufacturer front.”
Border, too, expects Samsung, Vizio and LG to be among the TV promotion leaders this year, pushing “large volumes and reduced prices, and potentially expect Chinese manufacturers … to push ahead with discounts.”
Border explained Chinese manufactures will include both OEMs for TVs from Walmart and Best Buy as well as second- and third-tier brands like Coby Electronics.
Among retailers, Border said to expect the big players like Best Buy and Walmart to again dominate Black Friday purchases.
Quixel’s Pratt pointed out that “Best Buy is doing price matching through the end of the year, except for Thanksgiving week. Also, we’d expect big retailers to start Black Friday deals earlier in the week, stores to open earlier again this year, and so forth. I would expect Cyber Monday to be big this year as well.”
But Gagnon said Amazon may not be the factor that many have feared this year.
“With Amazon now charging sales tax in many states that were tax-free last year, there might be a bit of upside to brick-andmortar,” he observed.
Among the hot display technologies to watch for promotions, Pratt is picking largescreen plasma and even 55- and 60-inch LED-edge-lit LCD TVs.
“Plasma has still been able to maintain an aggressive price point and offer more value, but it is getting tougher each quarter with multiple vendors offering 50-inch LCD/LED TV as well as the aggressive 60-inch pricing for the new Vizio LED model,” said Pratt. “We are expecting 60-inch plasma at $799 for Black Friday and 50-inch 1080p will easily get to $549 and $599.
“At least one manufacturers’ 60-inch pricing for LED/LCD TV will get down to $799, and there have been rumors about an even more aggressive price for the 60-inch model, which would be a great deal for consumers but really tough on the TV business,” Pratt continued. “Fifty-five inch will also be promoted heavily, many at $599.”
But Gagnon is picking new “LCD TV sizes like 39 and 50 inches to offer some choice not available last year, and an alternative to plasma TV, which is now in decline in shipments and retail sales.”
As for the establishment of any sustainable trends likely to emerge during the holidays this year, Gagnon said America’s general avoidance of highly featured or even modestly featured sets should dictate product plans for 2013.
“I would expect manufacturers to play to this trend next year and to not try and force features into lower levels of product,” he said.
Quixel’s Pratt said: “Big screen is back, and this time it is skinny. Vizio is aggressive and wants to play in 60-inch like they did in 32-inch. Replacement cycles really start in earnest in 2014, but we could see an early uptick, especially if the housing market continues to show improvements, and there have been recent indicators that good news is ahead on that front for 2013.”
But IHS’s Border said, “I think smart-TV sales in North America this year have been underwhelming after a good 2011, and with all the marketing hype there will be a significant push to shift smart TVs ahead in 2013. Other technologies such as LED/FullHD have gone mainstream already and are accepted features, whilst 3D has ceded ground amongst consumer consciousness to smart TV.”
