Pricing Wars Could Lead Discount TV Brands in the Dust

As the price of flat-panel TVs continues to come down to jaw-dropping levels, we're seeing signs that the value brands, which often managed to take a significant chunk of the pie because of their cost advantage, are now feeling the heat. Why? Because the name brands have reduced pricing to a point where they're often times actually in line with the value brands!

Research firm iSuppli reports that, during Black Friday weekend in the U.S., premium TV brands like Sony, Samsung, and LG, advertised pricing that was 23% lower than their average, while value brands like Vizio and Westinghouse reduced pricing by only 19%. Continuing on to today, Tina Tseng, an Analyst for the consumer electronics channels at iSuppli, says that the price differential between a 32" premium and value-branded LCD is just US$61. For an extra $60, would you opt for the brand name model over a lesser-known brand? Things probably won't be changing much any time soon either, as retailers scramble to move product during these difficult times.

So what does this mean? Will the value brands be obliterated by the premium models? On the flip side, however, how much money are the premium brands losing by selling products for prices that are essentially almost at cost? While the consumer comes out on the winning end of this stick, the business situation surely can't sustain itself like this for any great length of time.

It will be interesting to see how things pan out once the crazy pricing wars, not to mention the recession, come to an end. Stay tuned.

Black Friday Looked Promising

As online shoppers are clicking away at Cyber Monday, we're in good spirits since Black Friday actually turned out better than expected. A reported 172 million shoppers visited stores this weekend, up 25 million from last year! Even more impressive is that this number is significantly more than the 128 million people that the National Retail Federation (NRF) had originally anticipated would hit stores. So what made people come out with shopping guns-a-blazin' despite the current economy?

As they say, people can't resist a good bargain. And when times are tough, those who might not have bothered seeking out discounts before (the same people that often refuse to wait in line for anything) might just roll up their sleeves and get out with the rest of the deal-seekers. If you've been wanting to buy a new DVD player, winter wardrobe, or toys for the kids, this weekend was definitely the time to do it. In that respect, people probably felt they were better off shopping now and paying things back slowly than waiting until later and paying full price for the same thing.

Still, I surveyed a few people in the U.S. about whether or not they were going to head out to shop, and the responses varied greatly. One person told me that he couldn't bring himself to join the wolves, so to speak.

"I'm not desperate enough to line up at in a tent for a bargain," he said, noting, however, that there were tons of people camped out at his local Best Buy in tents from Thanksgiving night!

Another friend who had originally planned to go Black Friday shopping said she decided to "do her shopping from the web...like everyone else I know."

Meanwhile, a third person shopping in the heart of Manhatten, NYC, exclaimed quite frankly: "Recession? What recession???" It's safe to assume that the streets and stores were packed down there.

Granted, these are only a few personal accounts, but it appears that the situation, not surprisingly, varies from store to store, and city to city. The good news is that, overall, more people shopped, and spent more than they even did last year during this critical weekend. As for future outlook, of course we can't expect these numbers to keep up. The NRF is, however, sticking with its original prediction of a modest 2.2% increase in holiday sales for '08.

As for Canada, I haven't seen any definitive numbers. But a short visit to the Toronto Eaton Centre this weekend had me in shock: I have never seen that weekend destination mall so barren on a late November-early December weekend, and on a Sunday, to boot. Visiting Sherway Gardens shopper centre today for lunch, I was equally disappointed when I noticed that a fast food joint that had only been open for less than a month had already closed its doors. We're certainly up for some tough times ahead. Hopefully they won't last too far into '09.

Stay tuned for final numbers, including Cyber Monday online sales figures, once they become available.

Black Friday Update

A correspondent in Chicago reports to us that Black Friday line-ups in the downtown area are relatively thin. Photos above from the Northbrook Mall, taken shortly after opening at 8 a.m., show a moderate crowd in the Apple Store, but nothing to write home about. This is what an Apple Store in Toronto looks like on a normal day!

As for the "deals", we're told that, quote, "the marketing of the sale is better than the sale itself." Keep in mind that this might not hold true for every retailer in every U.S. city. But in this particular case, Black Friday "crowds" are a bit disappointing.

We're getting mixed messages from other sources: some stores appear flooded with shoppers trampling over one another...literally. In one Wal-Mart store in NYC, an unfortunate employee reportedly died due to the pushy crowds! (Though Wal-Mart only confirms that a "medical emergency" caused the retailer to close that store's doors). Some are claiming that it is in fact the bad economy that has forced them to come out and weather the crowds today: getting a "deal" might not have been so necessary before; but now, shoppers are willing to wait in long line-ups just to save a few bucks.

But other reports claim that retailers are cautious about how things will inevitably turn out. Even in shops with big crowds, people tend to be looking for that one fantastic deal, snagging it, and heading home versus prior years where they might have picked up a few extra items on the way to the check out.

Stay tuned for more information as it becomes available...

Happy Black Friday...Or is It?

As our neighbours south of the border roll out of bed with their bellies full of turkey and all the trimming, many will surprisingly still find the energy to get out there and shop today, known as Black Friday.

Historically, Black Friday, the day after the U.S. Thanksgiving holiday, is one of the busiest shopping days of the year, when retailers bring out the big guns, so to speak, with amazing deals and discounts. But it's more important than you might think, often determining a company's profitaiblity for the entire year. Some speculate that Black Friday could account for as much as 50% of a retailer's yearly profits! With the economy in the current state that it is, there's no doubt that many are crossing their fingers that shoppers will come, and that this year won't be a disappointment.

The National Retail Federation (NRF) has relatively high hopes for the day: while the organization is not expecting record-breaking numbers, it does anticipate a 2.2% growth in spending. Not exactly a very healthy increase (in fact, it's the lowest it has been in years), but it's better than one might expect given the financial crisis.

A preliminary NRF survey forecasts that up to 128 million people will be shopping today, and into the weekend. 49 million of these are definitely putting on their shopping shoes, while the remaining 79 million are waiting to see whether the "deals" are worth the trek into the city. Last year, 135 million people said they would go shopping on Black Friday weekend.

Interestingly, the NRF, like many other research companies, points to the falling gas prices as positively effecting the retail landscape. People perceive the savings on gas as some extra money in their pockets. Still, the defining factor on consumer's minds this weekend is price, price, price. So good deals are more important than ever.

"Shoppers who held off on buying a DVD player or winter coat over the last few months will find that prices may literally be too good to pass up," explains Tracy Mullin, President & CEO of the NRF.

Hopefully, Mullin is right.

It doesn't end on Sunday, though. Since the Web has become such a dominant force in the retail industry, the Monday following Black Friday has been coined "Cyber Monday", where at-home shoppers can take advantage of deals online. The advantage here is, of course, the ability to avoid the thrill and confusion of packed sales floors and long line-ups. Shop.org finds that more retailers will be offering Cyber Monday promotions this year than they did last year (83.7% vs. 72.2%).

Official Black Friday results won't be released until 4 p.m. this Sunday. But already, many local news outlets are reporting healthy turn-outs, with people waiting in lines from the early morning hours.

Still, we won't know how the retail industry has fared until the mass hysteria is over, the inventory has been accounted for, and the receipts tabulated. More than ever, this weekend is critical for the U.S. retail industry: it could, in many ways, make or break a retailer.

Black Friday, Holiday Shopping Looking Up...Considering

You've probably been bombarded with the words "economy", "downturn", and, (yikes!) "recession" over the past few months but, as Tracy Mullin, President & CEO of the National Retail Federation (NRF) puts it, "no one is canceling Christmas because money is tight." To the contrary, while customers will be tightening their belts a bit, they're still going to be out there shopping like they do every other year. They'll just be more mindful of snagging the best deals.

The NRF says that price will play by far the largest role in purchasing decisions this holiday season, with 40% of respondents to its Holiday Consumer Intentions and Actions Survey citing sales or promotions as what they'll be looking for. This year represents the smallest increase in planned spending: up just 1.9% to US$832.36 per person vs. $816.69 last year. But the number is still up, which is a positive sign.

Shoppers will likely cut back on gifts for the family, says the NRF, because they feel their family will "understand their current situation". Surprisingly, however, many will still make personal purchases, waiting until the holiday season to take advantage of the best deals. Overall, the NRF expects holiday spending to increase 2.2% to US$470.4 billion: not too shabby, considering.

As for Black Friday, which is one of the busiest shopping days of the year and scheduled to take place on Friday, November 28 (right after Thanksgiving), the NRF projects that shoppers will be gravitating more toward "personal and practical gifts" instead of big-ticket items this year. The Federation cites things like DVDs, CDs, and books as being most popular in the technology category (55.6%), followed by gaming consoles, Blu-ray players, and other like items (30%). (Funny enough, HD DVD players actually outsold Blu-ray players on Black Friday last year!)

Consumers will be changing one other thing this year: more will be opting to pay by cash instead of credit. But with good enough deals, they will fork over the dough.

Given the number of e-mail notifications I've received over the last few days about product price reductions, it appears that retailers (and manufacturers) are working hard to offer enticing enough deals to keep customers in the shops. Remember: if you don't shop while the economy is in a downturn, you'll only make it worse! (Some may call that female logic, but I digress).

In retrospect, it's eye-opening to think that at this time last year, retail prices were dropping drastically due to the strength of the Canadian dollar. Meanwhile this year, price drops are happening for a completely different, and opposite, reason. But on a positive note, it just goes to show that things happen in waves, and for every downside there's an up. I'm confident that holiday shopping will be just as hot this year as it was last; leading up to bigger and better years to come!

Happy Shopping!

Cyber Monday Shoppers Go Wild

Cyber Monday is the Monday after the U.S. Thanksgiving long weekend, and is named as such because of shoppers' tendencies to head to their computers for some post-turkey online shopping. This year was no different, with a total of 72 million shoppers expected to have made online purchases that day (according to a study conducted on behalf of Shop.org, the Website that named the day "Cyber Monday"). This is up from 60.7 million in 2006, and 59 million in 2005. What I infer from these figures is one of two things: more people are shopping online, or more people are shopping period. Either way, the point is that more people are shopping.

Although "official" figures for Cyber Monday haven't yet been released, the National Retail Federation (NRF) says that CyberMonday.com, a Website that compiles promotions and deals from more than 550 online retailers, tracked three times more traffic by 1 p.m. in the afternoon on that day than it had in the previous year. That equated to more than one-million visitors in just the first 13 hours of the day!

Cyber Monday is such a hit in the U.S. that the NRF holds a Shop@Lunch event in Washington, DC, where workers can surf for the best deals while munching on some mid-day grub. This is probably a good idea, since the Shop.org survey (which was conducted by BIGresearch) discovered that 54.5% of workers with Internet access planned to shop from work. So hey, why not encourage them to do so on their lunch hour rather than using up valuable company time to find the latest Tickle Me Elmo for their nieces and nephews? Surprisingly, men were dubbed more likely to shop while at work than women (57.3% vs. 51.7%). Not surprisingly, young adults, aged 18-24, were the most likely to do so at 72.9%. This year, more than 200 people attended the Shop@Lunch event in Washington.

In addition to offering neat promotions and deals, 24.7% of online sites offered free shipping for orders placed on Cyber Monday. As mentioned in a previous blog entry, 72.2% of online retailers planned some sort of promotion for the day, up from just 42.7% in 2005.

When shopping becomes an organized event at work, you know that the industry is on to something big.

[Photo: A few office workers attempt to snag the best online deals while attending the Shop@Lunch event that took place in Washington, DC on Cyber Monday: November 26.]

Keeping Track of the High-Definition DVD Format War

Trying to keep track of the high-definition DVD format war is like trying to keep tabs on the invisible man: it's a constantly moving target, and I have no idea where each format is at any given time. Sales of hardware and software, market penetration, movie studio and retailer support, all of which will help determine a "winner", are all consistently shifting. Not to mention that, depending on the source, different numbers are reported everywhere.

Hardware sales in one country are higher for X format; but if you look at numbers from a specific region, Y format is actually doing better. Meanwhile, software sales for one format in a particular store are triple that of the other format; but sales in a much larger retail outlet are double, which equates to much more when you look at the bottom line. It's like high school math problems all over again!

With that said, I thought I'd add some fuel to the fire, and increase the complexity of this math problem. The latest numbers I've received (from the RetailBRIDGE) say that the North American HD DVD Promotional Group is reporting that 750,000+ HD DVD players were sold in the U.S. this past Black Friday weekend. This includes both standalone players (like the one that was selling in Wal-Mart stores for US$99!) as well as the add-on drive for the Microsoft Xbox 360 gaming console.

I haven't heard any comparable figures about Blu-ray player sales throughout the weekend, but I'm sure they're similar in some fashion. It will be interesting to see how HD DVD and Blu-ray software titles sold during the weekend, especially since the National Retail Federation claims that books, CDs, DVDs, videos, and video games accounted for 41.7% of purchases that weekend.

As for the format war itself, if this busy, holiday shopping season doesn't put an end to the fight come early 2008, I don't know what will. But I might just have to track down my old math teacher for some help in figuring out which format is actually in the lead.

Results are in for Black Friday: Less Money, But More Shoppers

There's likely one question on everyone's mind this Cyber Monday: how did the Black Friday shopping extravaganza pan out in the U.S? Aside from playing a large part in U.S. retailer revenue for the year and holiday season, Black Friday provides a glimpse into what the year's holiday shopping season might be like overall. According to the National Retail Federation (NRF), the number of shoppers during the Black Friday weekend was up 4.8% to 147 million; but dollars per shopper were down 3.5% to US$347.44.

This isn't necessarily a bad thing. What it means is that there were more people shopping for smaller-ticket items rather than large purchases. Not to mention that the average selling price of many high-ticket items (especially flat-panel TVs) has dropped considerably since last year.

NRF President Tracy Mullin says that hot items this Black Friday were things like digital photo frames, laptops, and cashmere sweaters. Last year, the coveted items were higher-ticket buys, like high-definition TVs. Perhaps consumers have a more giving nature this season, having purchased something for themselves last year. This year, men shopped more than women, outspending them at $393.63 vs. $303.95.

Encouragingly, consumer electronics items accounted for 35.7% of the purchases. Books, CDs, DVDs, videos, or video games accounted for 41.7%. This will likely contribute to a welcome upsurge in final sales numbers for the CD and DVD market, which has been plagued by piracy and counterfeit materials for years. The most popular items included clothing and accessories at 46.8%. Other "hot" shopping items were toys (28.2%) and gift cards (21%).

Sales also started earlier this year, as more stores decided to open at midnight (and even earlier!) The strategy seemed to work, as 14.3% of consumers left the house to shop prior to 4 a.m.; up from 12.4% last year.

"Knowing that consumers would be challenged by the current economic environment, retailers hoped that higher traffic would offset lower individual spending, which it did," explained Phil Rist, Vice President of Strategy for BIGresearch, which conducted the poll for NRF. "...The holiday season is off to a good start."

Although discount stores led the pack, snagging 55.1% of the shoppers, it was nice to see that specialty retailers came in second at 43.2%. Traditional department stores received 38.7% of the traffic, while Websites welcomed 31.6%.

Today, nicknamed "Cyber Monday", will extend the deals to the Web, and will contribute more sales to the bottom line of what looks to be a positive holiday shopping season. Although NRF is still sticking to its estimation of a 4% rise in holiday sales this year, Mullin advises that final holiday shopping results won't be available until the last two weeks of December. Stay tuned.

Black Friday Update

According to the National Retail Federation (NRF) there isn't much to report just yet about Black Friday: it turns out no "preliminary" results will be released at all (they used that term mistakenly). But I did promise to follow up once the statement was made, so here it is.

NRF had previously projected that sales would rise 4% when compared to last year, for a total of US$474.5 billion, and is sticking with that estimated figure thus far. NRF spokesperson Scott Krugman tells me that final Black Friday results won't be released until Sunday, November 25.

For now, what we do know is that the best deals were found on electronics (especially flat-panel TVs), jewelry, clothing, and toys. But discounts were also being offered on small-ticket items that are ideal for gift-giving, like digital photo frames, hand mixers, and sterling silver jewelry.

"While many of these items will remain popular during the holiday season," said NRF President and CEO Tracy Mullin, "there is strong interest in them today simply because the prices are irresistible."

To pass up turkey and stuffing for long lines in freezing weather (especially in cities like New York where it felt like -2 at midnight!), the deals must be pretty darned irresistible, indeed!

In the online arena, NRF says that 72.2% of retailers plan a special promotion for what's known as "Cyber Monday", which is a drastic increase from the 42.7% just two short years ago.

Happy shopping to our neighbours to the south!

Happy Black Friday!

It's Black Friday today, and many U.S. stores opened long before any of us had risen from slumber. The National Retail Federation (NRF) predicts that 132.9 million Americans will shop this weekend, including Saturday and Sunday in addition to today. Many of these shoppers will fall into the 18-24 age bracket. Will this year's Black Friday compare to 2006?

Reuters reports that the Palisades Mall in New York City opened at 3 a.m., and lines had quickly formed at stores like Apple, Macy's, Old Navy and Circuit City. J.C. Penney opened to the public at 4 a.m., Toys R Us and Best Buy at 5 a.m., and Macy's at 6 a.m. In Geneva, IL, a line-up of about 150 people was cited to be in front of the Best Buy store, while big crowds had arrived at Sears and Kmart stores in the area to snag great deals on items like digital cameras, TVs, and toys.

In California, the San Francisco Chronicle says that people in the Bay Area were already forming lines yesterday at stores that weren't set to open until 4 a.m. today! CompUSA decided to start the festivities early, and began operation at 9 p.m. on Thursday.

Meanwhile, over in Washington, L.L. Bean is opening a full 24 hours a day from now until Christmas Eve (December 24), says the Washington Post. J.C. Penney and Kohl's opened at 4 a.m., while Kmart employees got to sleep in until 7 a.m.

MarketWatch reports that the number of GAP outlets scheduled to have opened at midnight was more than double the number last year.

What's really disturbing is those anxious shoppers who have waited in line the night, or even several nights, before Black Friday in order to take advantage of the best deals. Whatever happened to a nice Thanksgiving meal? It seems to be more like "rub-a-dub-dub, thanks for the grub, I'm outta here to buy a TV!" Anyway...

The NRF's President and CEO is scheduled to release preliminary Black Friday results today at noon. I will try to follow up with these results and report them here.

As for the shopping frenzy, I've inferred two things from these results:

1) people seem to be seeking out, more than anything else, electronics, clothes, and toys. (That, or these are where the greatest deals can be found). And

2) if people are leaving the house at midnight to shop, it seems that one thing they are thankful for is money in the bank!

[Photo courtesy of http://www.freedigitalphotos.net/]

Black Friday LCD/Plasma Deals

I just received a note from Consumer Reports that helpfully compiled a list of where U.S. customers will be able to find the best Black Friday deals this weekend. Of course, us Canucks support our own homegrown retailers. Nevertheless, I thought it might be interesting to outline a few of the most jaw-dropping deals being offered south of the border (all prices are in U.S. dollars, of course):

Would you believe that a 42" HD (720p) plasma would be available for $900? It is. Best Buy will be selling Panasonic's TH-42PE7U for that price, as will Sears be offering LG's 42PC5D. Even more shocking is that Costco is reportedly advertising a 58" 720p Panasonic plasma for "$500 off"; while CompUSA will offer Samsung's 50" 720p HP-T5044 for US$1,300.

Kmart will sell a 32" Olevia LCD for a measly $420; while 37" models will be available between $550 (Target) to $600 (BJ's). Sharp's 42" 720p LC-42D43U LCD will go out Circuit City shop doors for just $800, while the 46" 1080p LC-46D64U will be just $500 more at $1,300.

What's even more unbelievable is the fact that many retailers have already begun offering what could be considered "pre" Black Friday sales, like Wal-Mart offering the Toshiba HD-A2 HD DVD player for just $99; and Sears already selling Hitachi's 42" 1080p P42H401 for just $770!

Considering the massive headache one would have to endure by knocking elbows with swarms of consumers, waiting in horrendous lines, and fighting with the guy next to you for the last TV in stock, is it all worth it? I guess it'll make for a nice work-out after U.S. residents have just gorged on excessive amounts of turkey and stuffing (a TV report I saw the other night estimated that the average American would intake 5,000 calories on Thanksgiving night!)

As for us Canucks, we had our fill of turkey a month ago. And with the Canadian dollar continuing to hover around par, we can probably expect some pretty nifty Boxing Day deals once the holiday season has concluded.

Let the Holiday Shopping Begin!

If my experience this past weekend is any indication, holiday shopping in Canada certainly isn't suffering too much in wake of the Canadian dollar. I made the mistake of attempting to step foot into the busy Toronto Eaton Centre, and was nearly buried alive by a sea of shoppers, shopping bags, and child strollers. There were actual line-ups just to use the escalators! Granted, this Sunday was the famous Santa Claus parade, plus the Raptors were playing at home, so both events likely contributed to the magnitude of mass hysteria.

Nevertheless, despite how frustrating it was to work my way through the crowds to reach the few stores I actually wanted to visit, it was nice to observe that shopping is alive and well in one of Canada's busiest cities.

On another note, I noticed that the Music World store was advertising a "going out of business sale". I popped my head in, and saw that CDs were being offered at 10% off (a few at 30%). Not bad.

Meanwhile, shoppers in the U.S. are gearing up for Black Friday, which takes place this Friday, November 23. Black Friday is known as one of the busiest shopping days of the year, with absolutely jaw-dropping deals, and a shopping frenzy that would make the Eaton Centre on the afternoon of December 24 look like a ghost town.

[Photo courtesy of http://www.freedigitalphotos.net/].

Beware of Black Friday!

As retailers south of the border gear up for what's traditionally known as "Black Friday" (i.e. one of the busiest and most heavily promoted shopping days of the year), we're all wondering how things will fare. Will customers hoard into stores trying to get the best deals? Most definitely. Will retailers drop prices to record-breaking lows? Very possibly. Will chaos ensue? Time will tell.

Black Friday relates to the date in which retailers historically made the transition from unprofitability (the "red" zone) to profitability (the "black" zone). Since it falls on the day after U.S. Thanksgiving, which is always the fourth Thursday in November, the name Black Friday was born.

In 2006, this day led to record low prices and high shipments in the flat-panel TV arena. With sleeker, more technologically-advanced and already low-priced TVs on the market already, what will Black Friday mean for those playing in the LCD/plasma arena? As retailers fight for a larger piece of the shopper's money pie, how low will prices get, and how ridiculously great will promotional offers become? Judging from a move that Wal-Mart has already made, things could become mouth-droppingly exciting: according to DisplaySearch, the mammoth retailer is already offering a 50" HD plasma TV for less than $1,000 (the same TV sold for about $1,700 just last month). If this is a pre-Black Friday promotion, how cheap will the set be come end of the month??

DisplaySearch reports that Black Friday 2006 accounted for almost 20% of all TV units sold and 17% of revenues for the entire fourth quarter: yes, just that one day! Last year, Panasonic's 42" TH42PX75U was the best-selling model based on revenue, which was sold through Best Buy outlets at an impressive price of $999.

"Black Friday has always been a crucial event for retailers, but because of the surge in demand for flat-panel TVs, it has become an important indicator for selling trends for the rest of the holiday season," explained Paul Gagnon, Director of North America TV Market Research for DisplaySearch. "Brands, retailers, and many others can gain critical insights and develop tactical plans from these early Black Friday results."

With the Canadian dollar so high (and getting higher - it's almost $1.08 today!), Canada/U.S. borders could be more flooded than usual the week of Black Friday. Overly brave Canadians might just attempt being trampled by U.S. shoppers in an effort to cash in on the overwhelming deals.