NEW YORK — Dealers and distributors are girding for a tough holiday selling season based on lackluster summer and back-to-school sales.
If the current environment is any indication, cost-conscious consumers will eschew stepup products for good-enough fare, as evidenced by current supply constraints in 720p plasma and a surplus of higher- end LED TVs, industry executives told TWICE.
Even 3D TV, which had been touted as a possible sales and margin savior, could fall short of fourth-quarter expectations due to pricing that’s beyond most household budgets.
In response, manufacturers, retailers and buying groups are already planning aggressive Black Friday promotions that may begin earlier, and last longer, than last year’s extended event period.
Dealers are also placing bets on a host of connectivity products — inc lud ing IPTV, wireless audio, netbook and slate computers, and motionsensor gaming consoles — to ensure a well-stocked sleigh for Santa.
“This economy is the new normal,” observed Mike Temiz, president of Sixth Avenue Electronics, “and you’ve got to learn how to do business in it. It’s not the end of the world, but there’s less room for error. You have to be stronger and work harder and smarter.”
To claim its piece of the holiday pie, Sixth Avenue will be well-represented in 3D video games; audio components, including thinner loudspeakers to match flat-panel displays; Flip-style flash-memory HD camcorders; and, of course, TV.
“TV is the gateway to the customer’s house,” said Tom Galanis, Sixth Avenue’s operations VP, who foresees strong fourth-quarter demand for IPTV featuring Skype and other popular apps, as well as 3D. “Innovative, high-performance technologies delivered at a great value will drive our business,” he said.
Mike Decker, electronics marketing senior VP for the $12 billion Nationwide Marketing Group, said member dealers are presently changing out their showroom floors to make way for the newer TV technologies, including 240Hz LED and ultra-thin edge-lit models with IP and 3D features.
“It allows them to sell a higher mix,” Decker said. “Our guys are focused on maintaining margins — they realize that low-price activity isn’t pulling in the dollars.” The challenge, however, is balancing that against Black Friday planning to counter big-box promotions, and a recession-weary customer who hasn’t responded to Fourth of July or back-to-school sales.
“It’s been an exceptionally slow summer, and unfortunately it sets the tone for the fourth quarter,” Decker noted. “Even promotions aren’t driving the customer to purchase high-end products — instead, they’re looking at a price tier of $1,000 and below.”
Bill Trawick, president and executive director of the $5 billion NATM Buying Corp., concurred. “The TV business came to a halt this summer, and there’s a glut due to cancelled orders. Only 3D and 720p are selling, but higher-end LED is not moving as well as we’d like.”
Trawick said the excessive summer doldrums and occasional weekend spikes are making it difficult to plan out very far ahead. “Our guys are all planning ads now, but it’s very, very tough to figure out what’s happening in this industry due to the ups and downs. Some are planning it week by week. But TV is definitely worse than last year, and we may see some softness for awhile.”
Warren Chaiken, president/COO of national CE and majaps distributor Almo, believes TV demand will return with football season. “The game’s not on until they snap the ball,” he said. “We’ve had a very good run so I’m not surprised at the weakness now.”
Chaiken said TV sales will also be spurred by a wealth of third-quarter promotions, although which technologies win out is anybody’s guess. “People will be buying a lot of TVs, although it will be interesting to see what they buy. LCD? Lower-end LED? Better LED with 3D? I don’t know the answer yet.”
Chaiken believes 3D TV may serve more as a traffic-driving curiosity this Christmas than as a direct sales generator — at least until glasses are standardized — and also expects another boffo season for GPS despite competition from cellphone apps.
“Personal navigation is still very strong,” he said. “You can get a wonderful device now for $200 or less.”
Still, given the marketplace uncertainties, Almo is planning “more conservatively than aggressively” as it forecasts eight to 12 weeks out with its major manufacturers, although as a distributor, “it is our job to be in stock for our customers,” Chaiken stressed.
Conversely, fellow Pennsylvania distributor D&H Distributing is taking a more aggressive stance on inventory. “I think we will see some growth this holiday season,” projected purchasing VP Rob Eby. “I do think people will spend money, even if this may be the one time they do spend significantly this year. We are planning aggressively to be ready for what we hope will happen.”
To that end, the company is stocking up on LED and 3D TV, mobility products including notebooks, tablets and Android devices; storage solutions, including “cloud”-based products like Pogo Plug’s plug-in personal cloud storage device and a cloud-accessible USB key from myDitto; and motion- and sound-sensor gaming consoles including Xbox Kinect and Sony PlayStation Move.
Similarly, David Berman, training director of the Home Technology Specialists of America buying group (HTSA), sees ripe opportunities within the home, health and security categories this holiday season as baby boomers age, energy bills rise, and Apple’s iPad and iPod devices replace pricier touchpad interfaces on whole-home control systems.
“High cost was a roadblock to energy management and monitoring, but the Apple platform is generating interest and a whole new client base,” he said.
HTSA executive director Richard Glikes took a more philosophic slant. “I’m positive on the fourth quarter,” he told TWICE. “The country is desperate for good news, and with businesses now structured so lean, all we need is a modest lift to help cash flow and profitability.”