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Distributors: UPP Still Holding, Providing Better Margins

TWICE: How do you think unilateral pricing policies (UPP) or channel-management programs in TVs, and other categories, will hold up during the holiday season? How have these programs evolved?

Jerry Satoren, DSI Systems: While the profitability of the TV business is not what it could or should be, I think it is safe to say that it is better than in 2011, and I believe these programs have played a part. Manufacturers have changed their behavior in a positive way. Generally speaking, they have held the line on managing their inventories to market demand and held firm on pricing. The result has been a much more orderly marketplace that has been positive for all. I believe it will continue through the balance of the year. I have also seen that most authorized retailers have embraced these programs to their benefit.

Where the miss has been throughout the year has been on the Internet. Loopholes in vendor programs for online sellers have disadvantaged brickand- mortar retailers that continue to invest in selling floors and other support services that their vendors and consumers need. Additionally, the landscape of unauthorized sellers that are hosted on many marketplace sites has seemingly not been impacted in any way by these programs.

For these programs to make the significant changes that were hoped for, this is the area that needs to be addressed. The good news is that a couple of manufacturers have rewritten their programs in a way that appears to address this. They go into effect this week, and I remain hopeful.

Brent McCarty, Ingram Micro Consumer Electronics: We’re getting great feedback from our dealers and customer that UPP is working very well out in the marketplace. It’s helping our dealers realize more profit dollars while staying competitive. It’s been very well maintained and has been getting a lot of support. Therefore we expect it will hold up during the holiday season.

Curt Hayes, Capitol Sales: I think it’s good for the market, I hope that those who have MAP in place will take seriously their responsibility to manage pricing at retail and on the Internet — a job we all know is much more complex than it sounds. Price erosion is a serious problem, and I’m glad to see major manufacturers working to control it. Otherwise, legitimate dealers will have a tougher time selling product, which is not good for anybody.

Dennis Holzer, PowerHouse Alliance: I believe these programs are beginning to take hold and will hold up during the holidays. As a result of lower profitability at all levels from manufacturing to retail, all are re-evaluating to what extent each will go to get “additional” sales.

I do expect a lot more bundling and packages to promote “value” thus disguising individual price points for certain products. The future of violations will still ultimately be determined by the policing from manufacturers. If UPP is broken, and vendors take the necessary action, the future of violations will decrease because sellers will be aware there are finally real consequences.

Ron Eby, D&H Distributing: It’s been a challenging year for brick-and-mortar retailers dealing with showrooming tactics, but Black Friday promotions typically are an opportunity to pull consumers onto the sales floor.

Retailers need to continue to provide significant discounts, bundles and consultative sales strategies to keep Black Friday from becoming an e-tail-based holiday. That, or individual retailers can create proprietary e-commerce promotions of their own.

Don’t be afraid to leverage an ecommerce component for Black Friday. Regarding the UPP policies, the vendors are committed to it. In fact, there is a newer adjustment out there called MIP — minimum Internet price — that is specific to online pricing.

Warren Chaiken, Almo: This will be a real test by the manufacturers that have UPP and MAP pricing. I believe it will continue to help the dealers that support the program. We … believe that there retail consistency in the marketplace will be maintained during the holiday buying season.

Fred Towns, New Age Electronics and Jack of All Games: It seems like the manufacturers that are embracing UPP have been very stringent in making sure their policies are adhered to. Retailers see this as an opportunity to make more margin, as the industry accepts UPP more and more. It helps the retailer not have to play the price game as much.