All Brands Affected

Flat-Panel TVs in Short Supply, Stabilizing Prices, PRO Members Say

May 6, 2010 by Mark Seavy|Top News

SCOTTSDALE, Ariz. -- Step-up LCD and plasma TVs are in tight supply, sending dealers scrambling for available inventory but temporarily stabilizing prices, retailers told us at the PRO Buying Group meeting here.

The shortage is particularly acute in screen sizes larger than 32 inches, retailers said. Making the shortages even worse has been the “engineering issue” afflicting Sony Bravia LCD TVs that retailers have been reporting on for weeks (CED April 16 p2). According to retailers, problems with the sets’ processor modules are preventing full shipments of the product until. As a result, dealers say, Sony has slashed orders 40 percent. Sony has told a different story, maintaining that “unprecedented demand” for the sets, not a manufacturing glitch, has caused the shortages (CED April 23 p1).

Some vendors have blamed tight supplies on the transition to new models, but dealers said the shortfalls have been across all brands and that suppliers are moving to increase production. Panasonic expanded production of 3D TVs by 30 percent, the company has said. Samsung and Panasonic are the only vendors currently shipping new 3D TVs, but other vendors are expected to deliver product in the next 60 days, dealers said. “There is no secret there have been many vendors that are tight and some have taken the foot a little off the gas on some of the promotions because they know the situation and that has created a choppy condition in which availability can be hit and miss,” PRO Group Executive Director David Workman said.

The shortage has crimped sales and is creating confusion on the sales floor, where staffers need to struggle to keep tabs on which products are in stock, Vann’s CEO George Manlove said. Vann’s sales of 3D TVs have been brisk, but have been hampered by availability, he said. Sixth Avenue Electronics has experienced tight supply of 32- and 37-inch LCD TVs, but otherwise has had sufficient inventory, Division Merchandise Manager Jim O'Neill said. “There is lots of confusion on the sales floor because the sales people aren’t sure what they can sell and what we're going to have in stock so they are constantly having to bounce around,” Manlove said.

The result is a lose-lose situation “because if someone is predetermined to be a Sony customer, they're going to slide down the pole to whatever step-down model is available,” ListenUp CEO Walt Stinson said. “They don’t need a lot of incentive to trade down. That’s the most upsetting about the lack of step-up products."

The lack of available inventory comes as TV suppliers appear to be moving to better define channels of distribution after several years of only promising to do so, dealers said. “It’s still lip service and the question is can they stick to it?,” Workman said. “I think they are doing it because they see risk in their business not to. They have woken up to the value proposition that a non-national retailer represents."

Sharp is limiting distribution of its LC-LE920 series of 52- and 60-inch Quattron LCD TVs to Best Buy’s Magnolia, to Sears and to regional dealers with commissioned sales floors, a Sharp spokesman said. The strategy will leave warehouse clubs out of the mix at least for the first 12 months, dealers briefed on the plans said. The Quattron feature mixes standard red, blue and green with a fourth color, yellow, to bring out more of the picture, Sharp has said. The screen also is naturally brighter because of the fourth color, saving energy because a brighter screen takes less electricity to run, it has said. The 920 series Quattron, which will feature 240 Hz panels, will be available in July and pricing hasn’t been set, a spokesman said. Meanwhile, Panasonic has created a derivative version of its 50-inch 3D plasma TV for Best Buy and is starting to ship the VT25 models, which are off limits to online sales.

While PRO Group has made progress in securing limited-distribution lines, getting vendors to ship bundled promotions that are differentiated from those offered at national chains remains “a work in progress,” Workman said. Vendors have typically bundled Blu-ray players with the sale of a TV. While the PRO Group is “at the table” in discussions with vendors regarding the promotions, a firm plan hasn’t been implemented, Manlove said.

"We are making slow, but steady progress on a lot of major points,” Workman said. “Instant rebates are not going to go away and there are a lot of business reasons for that, not the least of which is that vendors believe that when they have them, their product gets advertised more. The key is how can you improve that business process to return that money to retail and that’s still number one."

PRO Group also has added Yamaha to its list of vendors participating in group forecasting -- a list that also includes D&M, Panasonic and Toshiba. It’s also working on a “more flexible” process with Sony, said Workman, who declined to disclose details. “If it has their support and it does work, it will give dealers large and small the best of multiple worlds,” Workman said. PRO also is “continuing to have talks” to gauge “the level of interest” in the group pursuing new product categories such as PCs, videogames, home automation, and energy, Workman said. Some members like Vann’s have long been selling PCs, while others, like Sixth Avenue Electronics, are just picking them up. ListenUp views PCs as part of a custom installation, but not separate category to be sold within the stores, Stinson said.

PRO Group Notebook …

Vann’s will open a smaller, 5,000-square-foot store in Missoula, Mont., in September designed to sell Apple products, smart phones, 3D TVs and broadband services, Manlove said. The store is about half the size of a standard Vann’s outlet and designed to fit into a mall, he said. The stores, up to 10 of which could open in the first phase, will target secondary markets to avoid conflicts with Apple’s more urban-oriented stores, he said. The outlets also will operate under a separate brand, said Manlove who declined to disclose the name. Vann’s has been weighing the new format for “a couple of years” and spoke with Apple regarding it concept in 2009, Manlove said. “What prompted my decision is where the growth is going to be in the next five years” Manlove said. “It’s going to be in digital devices and mobile and we're not in mobile” so this will give Vann’s access to new categories. Vann’s has seven full-size stores in Montana, including an outlet center in Missoula. “To do a store-within-a-store-didn’t make any sense because then you are under the umbrella of a legacy company,” Manlove said. “This is fresh and will have a huge online community connection” to help in marketing the concept.

Control4 will expand sales of its home automation products to the majority of Best Buy’s Magnolia in-store departments by year-end, said James Arnold, Control4’s senior vice president of sales. Best Buy officials weren’t available for comment. Best Buy, which was among the investors in Control4’s $17 million funding round in 2009, extended test sales of the company’s products to 50 outlets from 13 last year including those in Atlanta, Houston and Raleigh-Durham, N.C. Best Buy’s Magnolia Design Centers in Chicago and Costa Mesa, Calif. also carry Control4 products. The Costa Mesa standalone Magnolia Design Center opened in February and two others are expected to be added this year. Control4 also will ship its $200 “energy controller” to electric utilities by mid-summer, with retail to follow in 2011, Arnold said. The controller, which was expected available in Q1 (CED Sept 16 p4), is a wireless thermostat with a 5-inch LCD linked to a gateway device that communicates with smart meters. Control4 will pilot sales of device with several utilities including Bluebonnet Electric Cooperative, which signed on last year to carry the product in its Austin and Houston markets. Utilities will likely subsidize the controller so it be offered free to customers initially to promote the technology, Control4 officials have said. Control4 also pushed back delivery of its new 2.0 operating system to late June from Q1 to complete software development, Arnold said.

Electronics Express will open three stores this year, including one later this month, said CEO Leon Temiz, who declined to disclose the locations. The chain opened a new 88,000-square-foot headquarters in West Caldwell, N.J. last year that included a 3,500-square-foot design center (CED May 21 p3).

Peachtree Audio bought the computeraudio.com domain name for $3,800, getting a valued link back to its Signal Path International corporate Web site, CEO David Solomon said. The site highlights Peachtree Audio amplifiers and other components along with Era speakers.