Vendors, buying groups and retailers are calling for a lifting in the average net selling price of flat panel TV’s with some senior executives claiming that the currently selling price is not sustainable. One major retailer has even gone as far as saying that several brands won’t make it to the end of the year.
The claims come as Harvey Norman reports a 31.1 percent jump in first-half net profit, lifted by demand for flat-panel TVs, home theatre kits notebooks and computer games.
Harvey Norman has reported a net profit excluding items for the six months to Dec. 31 This rose to $174.14 million from $132.87 million a year ago.
A forecasts of $175.6 million, was called by a Reuters Estimates survey of five analysts, and with the company’s own guidance of a 25-35 percent rise. Net profit rose to $230.15 million from $180.50 million. Shares in the Company slumped 28% on the profit, revenue news.
The Deputy Managing Director of Sharp Corporation of Australia, Denis Kerr said “I have just done a trip around Australia and the feedback we get is that the average selling price of panels has to come up and that massive discounting is not going to work going forward.
The view was supported by both Richard Uechtritz Managing Director of JB Hi Fi and Narta Managing Director Kay Spencer.
Said Kerr” The CE industry needs to look after itself, if it doesn’t it will self destruct. We for one will not take business at any cost. We need profitable business for both us and the retailer”.
Richard Uechtritz said “We have over supply and too many vendors are selling flat panel display. Retailers are backing the brands that are selling Sony got 40% of the LCD TV market recently and Panasonic is a leader in the plasma market. It is important that there is a lift in the average selling price as the market is set to get tight”.
He added “Outside of the mainstream brands that are getting market share today there is much room left for a lot of other players and because they are desperate they are resorting to discounting. Several brands will suffer, Philips, NEC are just some of the brands that are suffering and there is more pain to come. Others have resorted to partnerships to survive and I believe that we will see more of this during the year”
Kerr added” The groups that are feeling the biggest discount pressure are the buying groups as they have to sell more to make more. They are stretching their targets by discounting and this is having an impact on the ASP. “
Kay Spencer of Narta the buying group for chains like David Jones, Bing Lee, Radio Rentals and JB Hi Fi stores said “The market is tough at the moment and the vendors and retailers have to lift the average selling price as there is far too much discounting”.
Recently both JB Hi Fi, Narta along with several other leading retailers said that they supported the concept of Pioneer Electronics moving into the market with a high end Plasma and LCD TV solution.
The perception is that Pioneer who have been around the home entertainment market for several years have a premium brand that will support a higher selling price that will be accepted by the average consumer. They also like the idea of being able to sell both high end plasma and an LCD TV offering from the same vendor who can also deliver high quality home theatre kits.
This they say is what is needed to drive a higher ASP.
