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Industry Restrains On Black Friday, Consumers Don’t

Last month’s Black Friday promotions were relatively rational compared with last year, when plummeting prices on flat-panel TVs obliterated margins and sent retailers like Tweeter, Circuit City and CompUSA reeling.

This time around, older models, 720p TVs and private-label products bore the brunt of the early-bird discounting, which should bode well for dealers’ bottom lines.

“The promotions were not as aggressive as last year,” observed Gregg Richard, president of P.C. Richard & Son, although shoppers remained undaunted. “The customer still came out and there was lots of excitement around CE.”

Dennis May, president/COO of hhgregg, concurred. Despite some programmed price movement from manufacturers, “[holiday] pricing is a little more stable, a little more rational,” he told analysts during a recent investors’ call.

Banc of America Securities retail analyst David Strasser observed that Black Friday pricing was “generally tame vs. last year,” with sales and margins holding up well. Among the specialty chains, “Best Buy appeared less aggressive than we would have thought,” employing its private-label Insignia and Dynex brands to drive opening price points, while Circuit City was “aggressive, but not to the extent that it upset the dynamic of the promotional environment,” he said in a research note.

“Things were a little bit tamer and not quite as excessive,” agreed Stephen Baker, industry analysis VP for The NPD Group. But then again, “There wasn’t as much to cut because we already cut prices a lot,” he said, particularly in categories like digital cameras where average selling prices on point-and-shoot models had already fallen below the $200 threshold. “It doesn’t get everyone all juiced up,” he said.

That wasn’t the case for other categories. Enas Rayner, a district manager for Circuit City in New York, reported that digital cameras, iPods and navigation items were in high demand on Black Friday at the chain’s new-format The City store in Manhattan, as were 42-inch, 46-inch and 50-inch HDTVs.

Armando Lopez, general manager of an adjacent Best Buy, said GPS systems were very popular, along with laptops, PCs and HDTV. He added that the store, on the corner of Fifth Ave. and E. 46th Street, was busier this Black Friday than last year.

At a Costco in the Long Island City section of Queens, store manager Kareem Zeffouni recounted how when the doors opened at 9 a.m., “Consumers ran in like something you see on TV,” and within eight minutes 20 58-inch HDTVs were sold. The warehouse club was offering $500 off the price of a 58-inch Panasonic 720p plasma display.

The manager of the store’s CE section said Black Friday business was “better than last year” in his department, with Wii gaming systems selling out as soon as they were put on the floor. The mayhem continued well into the afternoon, with some three dozen shoppers still queued up outside a nearby Best Buy at 3 p.m.

How Low Did They Go?

Top Black Friday specials from leading CE sellers