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Friday, Mar 29, 2024

Touchdown for Retailers

In fall, a man’s fancy turns to football, and a TV to watch the game on. And this year, perhaps more than most, that is ushering in a competitive fray of Super Bowl proportions for retailers and manufacturers alike. Thanks in large part to pricing, which has come down substantially for big screen and flat panel TVs of all kinds, sales have begun to skyrocket. With the season just getting underway it is already looking like this year TV sales will more than double compared to last year. “It was really competitive last year, but nothing like it is this year,” said Tamaryn Bratt, a principal at Quixel Research, a Portland, Ore.-based market intelligence firm that specializes in TVs. The price of flat panel TVs has dropped anywhere from 30 percent to more than 60 percent in the past year, depending on the make and model. That’s opened the market not just to high end and specialty retailers but also to mass merchandisers. “Wal-Mart is committed to being a leading retailer of high definition televisions,” said Jolanda Stewart, a spokeswoman for Wal-Mart, which this year began running television commercials specifically for TVs and now carries a range of LCD and plasma screen offerings from Samsung, Panasonic, Philips, RCA, Sony, Hitachi and Sanyo. Wal-Mart isn’t the only discounter moving into the category. A range of general and even home improvement stores have entered the fray. “If you asked me a couple of years ago the amount of electronics that went through (those channels) I would have said about 5 percent,” said Bratt. “Now what goes through Costco can be darn near 18 percent every quarter.” According to The NPD Group, a tracking and information service in Port Washington, N.Y., sales of LCD and plasma TVs brought in over $4 billion in sales for the first half of 2006, a 128 percent increase over the same period in 2005. But most of the sales, some estimate as much as 70 percent, will occur squarely in football season. “There are a lot of reasons why people invest in a bigger screen or home theater, but the most prominent is football,” said Pam Crane, executive vice president of marketing at Ken Crane’s, a big screen TV specialty retailer with a store in Encino. “And Super Bowl week is always a great week business wise. If there’s at least one hot team (in the Super Bowl) you are going to have a week that’s bigger than Christmas week.” It doesn’t hurt, retailers say, that football season for the most part coincides with the start of holidays, which also turns consumers’ thoughts to home entertaining and televisions. At the same time, women have been taking a more active interest in the purchase, which was traditionally reserved for men. The reason? Unlike early big screen TV models, flat screens, with their sleek design, are better able to fit into decorating schemes. Some even forecast that the new designs will extend the TV buying season further still. “As flat panel TVs are increasingly seen as female-friendly, we will also start to see Oscar night promotions pick up just as the Super Bowl deals fade away,” said Avi Greengart, principal analyst for mobile devices at Current Analysis and editor of Home Theater View, a site that provides news and analysis of home theater and digital entertainment. But with men still acting as the primary drivers of the purchase decision, it is football that is, as one industry veteran called it, “the killer app.” It is difficult to know just how much is spent during the season to promote the sale of TVs, but most say that advertising and marketing spending has certainly increased in recent years. One reason is that all the new technology has meant there is no clear brand name leader among manufacturers and many are anxious to build awareness with consumers. Add to that the longstanding industry practice whereby manufacturers contribute to the advertising budgets of retailers who promote their names, and the consumer is being bombarded with advertising messages. Then too, consumers don’t seem to need that much coaxing this year. Already, several of the largest chains have attributed extremely strong second quarter results to flat screen TV sales. Circuit City Stores Inc., which reported that its second quarter earnings jumped more than sevenfold, attributed double-digit sales increases in the second quarter largely to flat screens. Ditto for Best Buy, which reported that sales of high-definition TVs boosted second quarter earnings by 22 percent. Even very high end makers are feeling the combined effect of lower prices and increased interest in these TVs, helped along by more attractive designs that appeal to women. At Dwin Electronics, a Burbank-based maker of home theater components sold through custom installers, prices of plasma TVs have dropped to about $7,000 from $10,000 a short while ago. “What it has done is every time prices come down and products become more mainstream, it’s forced us to become more innovative,” said David Brooks, vice president for sales and market at Dwin. “We invest in R & D; and drive the product back to the high end.” Although high-end retailers say they are less susceptible to some of the price pressure that is affecting the mass market, they too are increasing their marketing efforts, if only because business is so brisk. “We’ve stepped up our marketing,” said Crane. “We certainly don’t have the visibility of the nationals, but we’re advertising more. We’re coming off a very good year, so everything seems to be working for us.”

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