Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now


Vandenbree: LG’s Inventory Under Control

San Antonio – Although retailers and analysts are predicting
heavy holiday discounting on TVs and other CE products due to inventory buildup
across certain brands,

LG Electronics

said not to expect any desperate moves in its lines this year.

“We feel very good about our inventory this year,” Jay Vandenbree,
LG Electronics sales senior VP for home electronics and appliances, told
several reporters attending the recent 2010 LG dealer show, here this week. “We
are very comfortable with our own inventory levels, and we’ve been very focused
on the retail inventory levels as well.”

Vandenbree explained that LG feels it spiritually owns its
products until the customer walks out the door with them, regardless of whose
warehouse holds them.

“Ten years ago it was about emptying your barn and filling up
their barn. That is a losing operational platform. As we move along we have to
focus on the sell-through,” Vandenbree explained. “Every time we have a product,
we have a sell-through plan, and we have to monitor that plan, and we try to be
very, very consistent about that so our retailers don’t find themselves upside

“We don’t have a barn load of inventory that we are trying to
shove into retail as we understand some other folks are. We’ve been cautious
about that, plus we’ve grown our share this year. So even in a flat business,
our share is up. We’ve been able to do that both with our existing customers
and some of the new customers we’ve added,” Vandenbree said.

He said LG’s “comp customer sales,” are up double digits as the
company expands its distribution base with new accounts.

“So our growth isn’t just about new distribution. It’s about
consumer acceptance of our product, and we manage that inventory all the way
through to sell-through,” he said.

As for the impact that potentially excessive inventory levels
among competitors might have on pricing during the holiday selling season,
Vandenbree said: “I think consumers have a list of the things that they want to
buy based on what is important to them. The more confident they are, the deeper
they go with that list. I don’t think you take a $2,000 item, price it at
$1,500, and make people go further down on their lists. Anybody can sell a
dollar for 50 cents — it doesn’t take a lot of effort or work for that. But I
think if you are not looking at the consumer, you are going to try to force
something on them that they are not going to want to do.”

Concerning the speculation cited by some industry observers that
some retailers may be planning to go off minimum advertised pricing (MAP)
policies to move certain items during the holiday’s, Vandenbree said:
“Retailers are free to price a product at whatever they want to. That is not
something that we would get to weigh into. But I would try to understand what
they are trying to accomplish. The consumer is going to buy what they want to
buy. Discounting at 20 percent is not going to get more consumers out. Either
you are confident and you are going to make that purchase, or you are not
confident and dropping the prices is not going to excite the people.

“The only thing I would say differently this year is if it is
manufacturing driven, a supply issue, then manufacturers are going to be
offering certain incentives for the retailers to do that. That is the likely
outcome of those things. Not promotion for cash, which won’t be a MAP issue for

This holiday season, LG is expecting strong sales in flat-panel
TVs in the 32-inch to 46-inch screen sizes and also plans to promote its major
appliance selection heavily for the Black Friday period, said James Fishler, LG
go to market operations senior VP. “The company is also expecting strong sales
in major appliances during the Black Friday period.”