Rosy Outlook for TVs, Especially Flat Screens

Aaron Baar, Marketing Daily—
February 17, 2009 —  There may be a recession on, but people were still spending at least some of their money on consumer electronics--particularly flat-screen televisions--in January.

According to the Consumer Electronics Association, shipments of televisions with screens 35 inches or larger are up 62% over January 2008, and are well ahead of the 16% gain forecasted for the year. The CEA forecasts that 16.7 million such televisions will be sold in 2009--up 16% from 2008 (which was up 33%) from the previous year.

"With the current economic climate, people are cutting back. But they still need to be entertained," Tom Edwards, a representative for the association, tells Marketing Daily. "People have already cut out movies and restaurants, and the televisions are much more affordable than they were 10 years ago."

In addition to increasing their home entertainment options while nesting and retrenching, two other factors likely contributed to the increase in television sales in January: the Super Bowl and hype about the transition to digital broadcast television. And with the DTV transition now delayed until June, there may be even more opportunity for television sales to increase, Edwards says. "It gives [retailers] more time, and it will be right around the Father's Day promotions," he says.

Such demand could also lead to a shortage at retailers. According to the CEA, the current inventory of 35-inch and larger LCD display televisions will only support one-and-a-half weeks of sales, if demand stays at 2008 levels. If sales continue to follow the January increase trends, the inventory only supports about a week's worth of sales, Edwards says. Retailers are also taking a cautious approach when it comes to shipments--not wanting to carry too much inventory and be stuck with low-margin discounts--in a recessionary year and in advance of new product lines coming in the spring and summer months.

In January, the CEA projected that consumer electronics sales would decline 0.6% in 2009, to $171 billion compared with 2008's $172 billion. However, the organization predicted digital television sales would increase, as would Blu-ray, high-definition DVD players and smartphone sales.