NEW YORK —
The continued impact of a sustained economic downturn which has made for more frugal TV shoppers this year, has left manufacturers and retailers in the unenviable position of having to clear merchandise around the holidays.
And while this may not come as good news to vendors, who for the most part have resisted as much as possible compressing margins further on flat-panel models, it should come as great news to holiday shoppers looking for bargains. But whether that will be enough to bring customers around this time out, is the multibillion- dollar question.
Key analysts who monitor the TV display industry are calling for aggressive holiday marketing and promotional activities from both manufacturers and retailers to stimulate sales and move excess inventory that has been building over the summer and fall.
“Currently there are a couple of things that are impacting the TV market,” observed Riddhi Patel, iSuppli television systems principal analyst. “Consumer spending is down for CE, and consumer confidence is low. There are general concerns around the economy and price declines have not been aggressive. Also, when promoting features like connected TVs, there is a lot of confusion.”
She added, “Consumers are interested but to fuel demand, brands and retailers will have to go above and beyond to show increased value for money and that is where bundled deals may come in handy.”
Paul Gagnon, DisplaySearch North American TV research director, said, “Since sales have been so soft so far this year, there’s some urgency to try and save the fiscal year with a strong showing during the holiday season, which for all purposes extends into January for TVs. With panel prices beginning to drop aggressively in late July through September, and continuing to decline through the early part of next year, the product costs are coming down, which will make it easier for brands and retailers alike to offer more substantial discounts than we’ve seen so far this year.”
Tamaryn Pratt, principal analyst at Quixel Research, said she is looking for small screen sizes and 40-inch flat-panel sets to continue to be strongly advertised during the holidays to generate traffic.
“However, compared to past years we anticipate fewer consumers stepping to high-end sets,” she said. “Expect manufacturers to turn the discount lever opportunistically based on the inventory they need to move. As they have all year, consumers should probably keep waiting until their favorite flavor is on sale.”
Similar to the past several years, the price promoting won’t wait until Black Friday, according to the analysts.
“I think we’ll see a similar early start to the promotional season than we’ve seen for the last few years, kicking off in early November,” said Gagnon.
“Like last year where we saw Thanksgiving deals across the whole week, this year too it could be a week or even 10 days,” predicted Patel.
As for retailers, the chains expected to be among the biggest movers and shakers once again include Walmart playing against Best Buy, said Gagnon, while iSuppli’s Patel said she sees activity more or less “across the board. Nationals will be aggressive but so will the mass merchants and club stores.”
In some cases the activity this year could get rough enough to ruffle feathers, she continued.
“A trend we are seeing is that the retailers are showing interest in selling products below MAP pricing set by the brands,” she said.
Key areas to watch will again include the 32- and 37-inch screen sizes and 42-inch for LCD TVs. In plasma, 42- and 50-inch models should again be aggressively advertised, they predict.
“We are hearing $199 for 32-inch HDTVs from opening price point brands and $249- $299 for 32-inch HDTVs from tier 2 brands and some premium brands as well,” said iSuppli’s Patel. “Forty-two inch CCFL backlit HDTV pricing should be around $499. There are some aggressive deals that we will see for LED backlit LCD TVs, too.”
Quixel’s Pratt said “most of the Black Friday doorbuster prices will be led by third-tier, no-name brands and a few sheltered models that the bigger brands will sacrifice for the day. No-names will probably offer up $99-$129 for 19-inch CCFL LCD TVs, $199-$229 for 32-inch, $449-$499 42-inch, and $599 46-inch. Top tier brands will likely offer $259-$309 for 32-inch CCFL LCD TVs, $529-$549 for 42-inch and $699 for 46 inch.”
In plasma, Pratt said 2D 42-inch 720p models have already been advertised as low as $397 and 50-inch 720p models as low as $579, “so it’s unclear how much more they can do this year. There will be more value in the 1080p 3D plasma product line up, with Black Friday deals getting close to $1,399. Of course expect regular 50-inch 1080p below $1,000.”
As for LED LCD TVs, Pratt is looking for Black Friday promotions on 40/42-inch 1080p LED sets starting at $699, and 46/47-inch sets starting at $799.
DisplaySearch expects to see 32-inch 720p CCFL LCD TVs for less than $300 and around $500 or less for 40/42-inch 720p CCFL (60Hz) LCD models.
In plasma, 720p units should do well again this year with 42-inch HD prices appearing at around $400-$450 and 50- inch HD around positioned at $600 or less, said Gagnon.
There was some difference of opinion among the analysts as to which price segments would see the heaviest promoting this year.
“Given that consumers appear to be a little conservative in spending behavior this year, similar to last year, I would expect a strong focus on entry price points and not the push for advanced mid to high-end TVs that we saw at the beginning of the year,” Gagnon said.
But iSuppli’s Patel said, “I believe that more aggressive promotions will be around LED models in the larger sizes and smaller CCFL ones. Even some smaller size LEDs could see aggressive promotions specifically 19-, and 26-inches.”
And where will all the activity lead?
Patel said: “I believe that this year will be flat to down over all. There is a high chance that the Q4 sell in for 2010 will be lower than Q4-09, for sell-in. This is because of the existing inventory situation and caution by retailers due to slower demand. I expect Q4-10 will be higher than Q4-08 and flat or little lower than Q4-09.”
DisplaySearch’s Gagnon said: “We think there will be some growth of sales from the 2009 to 2010 holiday seasons, on a unit basis. This contrasts with mostly flat to down year-on-year growth for Q1-Q3 of 2010.
Quixel’s Pratt is forecasting limited growth, around 2 percent, for the LCD TV category, “which is pretty breathtaking compared to the 19 percent increase from 2009-2010. Total sales will top 31 million units in 2010 but we could also make a case for zero growth.