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HES Foresees Rational Holiday Season

Pelican Lake, Wis. — Supply constraints in flat-panel TV should greatly reduce the kind of fourth-quarter price volatility that disrupted the CE industry during the 2006 holiday season and beyond.

That’s the conclusion of Jim Ristow, executive VP of Home Entertainment Source (HES), who shared his outlook with members of the specialty A/V buying group today in the first of an ongoing series of quarterly Webinars.

Ristow said production cutbacks and reallocation of inventory to foreign markets by some vendors will result in tightness in key panel sizes in both plasma and LCD. The hardest hit category will be 42-inch plasma, which is “almost completely gone” as manufacturers shift production to the more profitable 50-inch panels — which may experience spot shortages themselves.

Other hard-to-come-by panels will be 32-inch and smaller-sized LCDs, which provide little profit for vendors and dealers; 52-inch LCDs, supplies of which will be constrained as Sony and Samsung slowly ramp up their joint Gen-8 plant ; and 42-inch LCDs, which will be in short supply as dealers scramble to replace comparably sized plasmas.

What’s more, no-name Tier 3 TVs have all but disappeared as the price delta between Asian factory imports and Tier 1 brands has diminished, he said.

In anticipation of the squeeze, HES is ordering aggressively to assure sufficient holiday supplies for member dealers.

“It’s a 180-degree change from 2006,” Ristow said, when a glut of inventory led to panicked, unplanned price moves.

The one exception remains Black Friday, when price points are rumored to hit $600 for a 42-inch Tier 1 plasma and $900 for a 46-inch Tier 1 LCD at at least one national chain. The big difference this year over last is that loss leader promotions will be funded by retailers rather than vendors, which should limit quantities and sale hours.

HES has secured promotionally-priced product for those members who plan to participate in the Black Friday fracas. For the balance of HES dealers, Ristow believes that strong consumer demand and widespread confusion over formats and features will provide an opportunity to “return to the step-up, solution-based floor salesmanship of eight years ago.”