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Service-Plan Providers Mixed On Holiday Forecasts

Providers of extended-service plans are divided on their outlook for holiday sales. While some believe consumers will come back in force, others are anticipating a flat fourth quarter, matching last year’s disappointing results.

All agree, however, that the discounting will be fierce, making attachment sales of extended-service plans all the more critical to dealers’ bottom lines.

Comments from the CE industry’s leading extended-service providers follow.

TWICE: What is your outlook for the coming holiday period?

Bruce Saulnier, president, AMT Warranty: AMT Warranty’s customers are being prepared to take full advantage of the holiday season, and we’re optimistic that it will ultimately show improvement over last year. The shoppers will be out, and they’ll be looking for smart buys.

The climate is ripe for ESP sales as consumers look to protect the purchases they do make, and we’re conducting enhanced sales training with our customers’ floor sales staffs to help them identify opportunities and maximize attachment rates during the holiday period.

ESP sales can play a critical role in whether there’s a profitable story to tell following this holiday shopping season for retailers. ESPs have got to be woven into the organization’s cultural fabric.

Keith Meier, senior VP and general manager, Extended Service, Assurant Solutions: Overall, this holiday season will likely be quite challenging for retailers from a margin discounting standpoint. Retailers will have to lower prices in order to attract buyers to make purchases.

We believe consumers will be opportunistic this holiday shopping season. The environment will be challenging for retailers. If consumers consider retail promotions to be compelling, we expect them to take advantage of buying opportunities.

Interestingly, this topic has come up in several conversations with retailers as of late. All signs point to a consumer electronics price war, which obviously would have a significant impact on retail margins.

Bankers Warranty Group, Kevin Rupkey, president/CEO: There are quite a bit of mixed signals out there about how the holiday selling season will fare this year. We are keeping a cautiously optimistic viewpoint that the holiday season will show some improvement, since there are some positive indicators that showed gains in consumer confidence and momentum for retail sales in the second half.

As far as extended-warranty sales are concerned, we feel our clients are well-positioned to take advantage of service plans to increase revenue and profitability. If in fact there is concern that excessive promoting will make it a profitless season, retailers should do everything possible to fill the gap by ensuring they attach an extended warranty to every sale.

Matt Frankel, president, warranty division, Chartis Insurance: In the past I’ve been more bullish, believing that the glass is half full. But now, unless something drastic happens within the next 30 days to give consumers a more positive outlook — like if the employment outlook improves — I don’t think the holiday season will be very strong. It will probably be on par with last year and below 2007.

The season will also come even later as consumers hold out for better deals. Black Friday will always be a good day for retail, although this year consumers may just come in for the doorbuster and nothing else.

Joe Romano, senior VP, client services and business development, NEW Customer Service Companies: Although consumer behavior during these economic times can be difficult to predict, recent holiday forecasts are calling for a late holiday shopping season, with consumers taking a more strategic and selective approach to their gift giving.

As it does every year in preparation for optimizing seasonal buyer trends, NEW has been working with its partners to sharpen marketing and training programs and store execution strategies. We anticipate that consumers will be making smart spending decisions this year, which means doing extra homework before making their buying decision. So, targeted marketing strategies, promotions and store execution will be crucial in turning a profitless season into a profitable season. Increasing associate training and ensuring that seasonal employees have quick reference tools to enhance their knowledge of products will ensure a smoother sales experience for the retailer while maximizing the customer’s holiday shopping experience.

Also, by expanding into new product categories, and maximizing our clients’ service-plan offerings such as ADH [accidental damage from handling], troubleshooting and enhanced interactive customer portals, we are positioned to weather whatever the next few months might bring.

Chris Smith, president, Service Net Warranty: This holiday season will shape up to be the most difficult one in our lifetime. Consumer confidence is down and unemployment is up. As the holiday season will undoubtedly be promotional and profit margins tight, retailers must maximize the consumer experience with in-home services, service contracts and accessory sales.

The retailers who penetrate heavily in these categories will have a profitable holiday season with good margins, lower returns and, most of all, happy consumers.