The Race to Zero
You won't be able to count on big flat panel margins to sustain your business
for much longer. It's time to distinguish yourself in the marketplace.
By Robert Ain
Let's face it—many custom retailers have enjoyed a free ride the last couple of years when it comes to sales of video displays. Never before has such a large group of consumers been willing to pay such high prices for televisions.
Many dealers are selling fewer customers more expensive items, especially the video display. And why not? HDTVs, particularly of the flat panel variety, are a white-hot aspirational product category, and the margins have been rather pleasing for dealers thus far.
But the salad days won't last forever, as any specialty dealer keeping an eye on the market trends knows. According to NPD Research, the average retail price for a plasma TV was $6,512 in 2002. Last year, the price fell to an average of $3,755.
Now to the present and future—The Race to Zero. Display prices are down over 40 percent from 2002 to 2004, with continuing significant decreases in 2005 and certainly beyond. LCD and plasma flat panels are now competing head-on with traditional CRT in terms of both price and the selling spaces of mass merchant retailers. Compare this to five years ago, when virtually all plasma displays were delivered and usually installed by specialty dealers. Today, that is no longer true.
The Wal-Marts, Targets and Costcos are significantly growing their HDTV and flat panel businesses, and prices will become even more competitive as the products become more promotional.
Remember the 1970s and early 1980s, when any given audio specialty dealer swore it would never sell a video product? Back then, the video business, then known as the "TV business," was conducted largely by mass-market dealers and department stores. Even Bloomingdale's had a TV department.