Major TV vendors are concerned that they are being discounted out of business with several telling ChannelNews that the current round of TV pricing is not sustainable in a market that is currently worth $3.2 Billion and has over 145 different brands vying for marketshare.
During the past 12 months the price of a flat panel TV has fallen more than 20 percent and over 60 percent during the past four years.
“This is not sustainable and discounting is having an impact on all vendors not just Panasonic” said Paul Read, Director of Consumer Electronics at Panasonic Australia.
His comments are backed up by executives from several other vendors who believe that a combination of product discounting and the offering of gifts such as Blu-ray players, gaming consoles and 3D movies are driving some vendors into “negative profit” territory.
Kay Spencer the head of the NARTA buying group said: “The TV market is extremely difficult right now. Value has to be put back into the market and we cannot continue the way it is. Profitability has gone from the market and both retailers and vendors are concerned”.
Some vendors are already feeling the impact of discounting and promotion giveaways. Last month ChannelNews revealed that Sony Australia revenues have slumped by over $200 million during the past 12 months and that Sony Australia profits had fallen from $49 Million in 2009 to losses of more than $9 million in 2010.
In 2009, in an effort to compete in the TV market, Sony Australia gave away thousands of Sony PS3 gaming consoles along with hundreds of Blu-ray players. One of the first companies to offer “large ticket” value added incentives, Sony has been blamed with starting a program which is not sustainable today.
Mark Leathan, the former Consumer Electronics Marketing Manager at Samsung Australia, who has recently taken up a role as Marketing Director at Caltex Australia, said: “The TV market is tough and I am glad to be out of it. Discounting is tough if you don’t have market share. Samsung has good market share and is profitable. Sony did not have marketshare in 2009 and they have suffered. They were also one of the first vendors to offer big incentives for consumers to purchase a flat panel TV, a move that is sustainable in a discount marketplace”.
Mark Beard, Marketing Director at Sharp Australia, said: “The amount of technology going into a flat panel TV is staggering and consumers should be paying a lot more for what they are getting. They have paid a premium price in the past for a flat panel TV and I see no reason why they should not be paying more for a TV today that has significantly more technology packed into it”.
“As for the TV market as a whole it has always been competitive and right now everyone is looking over their shoulder to see what other TV vendors are doing especially with value add promotions. People losing share or don’t have the volume are often the ones who complain the most about discounting”.
According to Paul Read at Panasonic, TV technology is now being sold at “ridiculous” prices when you compare the technology that is packed into a TV.
Speaking at the NARTA Conference in Europe, GFK, Australia and New Zealand MD, Gary Lamb, recently told retailers that during the last four years, the average price of an LCD TV had fallen 66 percent to just over $1,000.
Large screen Plasma TVs similar to what is being sold by Panasonic he said, was already below the $1,000 barrier and still falling in price.
Lamb told the audience that the $3.2 billion Australian TV market is larger than the rest of the consumer electronics marketplace and that TV prices were in “freefall” and that retailers would find it difficult going forward to match the 3 million television units sold in Australia during the past 12 months.
Lamb said that the value of the flat panel TV market in Australia “has already begun to decline” and that finding any form of growth would be difficult for retailers in the current environment.