Deals on consumer electronics loom, on Black Friday and beyond
Consumers in the market for gaming consoles or flat-panel television sets will find no shortage of deals this year as electronics retailers make an aggressive play for holiday dollars.
Electronics proved to be a bankable commodity last year, exceeding holiday sales expectations and closing the shopping season up 6 percent from 2008. Retailers are looking to replicate that success with steeper discounts and an earlier jump on Black Friday promotions.
Best Buy, the largest electronics retailer, has been rolling out promotions since the start of the month, about 10 days earlier than in previous years - matching the strategy of Sears, Wal-Mart and Amazon.com. These dealers are touting discounts of 20 percent or more through promotions that will last a day or two.
In a countdown to Black Friday, Amazon.com is conducting flash sales staggered throughout the day. One of the recent "Lightning Deals" offered a Panasonic DMP-BD45 Blu-ray Disc player for $79.99, or 34 percent less than the list price of $105.77.
"Over the last few years, the earlier promotional period has continued," said Paul Ryder, vice president of consumer electronics at Amazon.com. "So we are being more proactive with our own exclusive deals as well as matching."
Target, for its part, is offering free shipping with the breadth of its one-day deals. Consumers can expect the shipping wars to heat up now that Wal-Mart has launched free shipping on 60,000 items with no minimum purchase.
The big-box leader has pulled a few choice deals from under its hat, including the Garmin GPS Navigator for $117, less than half the retail price. There is still a shakeout in the electronics industry, where the absence of Circuit City has left business on the table that retailers are trying to grab.
Markdowns are particularly steep for flat-screen TVs, as manufacturers try to rid themselves of excess inventory that piled up because of weak consumer demand throughout the year. DisplaySearch forecasted last month that TV shipments would grow to 243 million units this year, a 16 percent year-over-year increase.
"Consumers have the best opportunity this year to purchase a TV at a heavy discount - 30 percent off or more," said Jeff Pearson, vice president of marketing at Hhgregg. "There is a lot of product on the market and a lot of deals."
Stephen Baker, vice president of industry analysis at NPD Group, a market-research firm, said, "The emphasis on TV this year is much higher because it remains relatively under penetrated, with more opportunities to get people to upgrade." But, he added, "there's certainly too many TVs chasing too little demand."
Indeed, early indicators suggest consumers are clamoring for newer technology. Laptops,iPads, eReaders and game consoles topped the list of must- haves, according to a survey conducted by the Consumer Electronics Association.
Retailers, while keen on the cut-throat television discounts that define Black Friday, are catching wind of consumer trends and stocking up on popular electronics, such as Xbox Kinect and the Kindle. Electronics inventory, however, has remained constrained in most categories other than televisions.
"The numbers we sold [for electronics] in 2009 were way out of proportion to the rest of the retail business," Baker said. "In 2010, we've seen a rolling readjustment and a recognition among the supply chain that the results of 2009 are not replicable." Electronics revenue, he forecasts, will fall flat this year, as deep discounts undercut retailer profits.
IBM retail analytics leader and global business services partner Michael Haydock contends that economic indicators bode well for the electronics industry. By tracking the correlation between disposable income to consumer spending habits, he predicts sales of electronics will grow to $8.6 billion this month, an increase of 4 percent for the same period a year ago.
"The umbrella of conservatism is the overwhelming economic factor, but people are working and spending again," he said. "People have been saving up for larger purchases, and they are starting to see deals that will get them off their couch and into the stores."