The Value Defenders!
Some custom retailers dismiss the Black Friday shoppers who snapped up the $478 32-inch, 1080i LCD HDTVs at Home Depot or the $988 42-inch plasmas at Wal-Mart as “not my customers.” Yet many are concerned about, if not directly rattled by, the new retail competition and the ridiculously low flat-panel prices that set the tone for the 2006 holiday selling season.
The fourth quarter of 2006 hammered home a new reality for the custom retailer. For those working the middle ground between high-end custom integration and A/V retail, it’s going to be a wild, challenging ride—one that may require more C-tailers to shift further towards custom-centric business models.
Said Steve Honig, director of sales at Wilshire Home Entertainment in Thousand Oaks and Valencia, Calif., “You’ve got to sell a lot of panels to get the dollar amount that you need just to break even with last year’s sales. It’s huge.” By mid-November, Honig saw panel prices drop “faster in the last two months than in the last three years. Our average panel is $700 cheaper than it was a year ago.” Research firm DisplaySearch likewise reported that average prices for 37-inch and 40-to-42-inch LCD and plasma TVs were down “at least” 25 percent from early August to mid-November—and all of this was before Black Friday.
As market conditions continue to rapidly evolve, C-tailers are rethinking their marketing and merchandising strategies, exploring new custom-centric technologies, tweaking labor efficiencies and sharpening sales floor pitches.
Kind of a Drag
Are plummeting flat-panel video prices at retail hurting business in other custom-centric categories and business segments?
“Some of the evidence we’ve seen in the bigger box stores is that the declining prices of TVs are actually starting to help some of the audio markets,” said Stephen Baker, NPD’s vice president of industry analysis. “It’s freeing up some money to spend on audio.” Baker hasn’t seen pressure on service pricing in NPD’s data, either, and given service’s importance and complexity, “We don’t see that as something that’s going to be a problem, certainly not this holiday,” he said.