TV Price Cuts Trigger Holiday Season Store Price Wars
On the Undercutting Edge of Electronics
Article Source By Ylan Q. Mui
Washington Post Staff Writer
Thursday, November 30, 2006
The Christmas shopping season accounts for about 20 percent of all sales for retailers, and success or failure during these two months can have long-term effects. When Wal-Mart began cutting prices on toys three years ago, it dethroned Toys R Us and ended up controlling the market. Let the race to rock bottom begin.
“Once one retailer starts lowering prices, the other retailers have to respond,” said Richard Weinhart, an analyst with BMO Capital Markets. “There’s kind of been a downward spiral.”
The Panasonic 42-inch plasma high-definition television sold for an average of $1,762 at Circuit City in September. By October, it was $1,687. And the day after Thanksgiving, the price hit a temporary low of $1,199.
Of course, Best Buy was offering the same TV for $999.99 that day. Not to be outdone, Circuit City bounced back with an announcement this week that it would beat every competitor’s price on TVs.
This year, consumer electronics dominate the landscape, thanks to two new video game consoles, PlayStation 3 by Sony and Nintendo’s Wii, and the roll out of more affordable flat-screen televisions.
“In electronics, there aren’t too many categories that have very poor growth prognoses,” said Stephen Baker, vice president of industry analysis for consumer research firm NPD Group.
Sales of high-priced electronics helped drive an average spending increase of nearly 19 percent during the official kickoff to the holiday season last weekend, even though fewer shoppers turned out than last year, according to the National Retail Federation. [Full Story]
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