TV & IT Discounts Out Price Rises In As Consumers Start Spending

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The cost of consumer electronic goods are set to rise as retailers and vendors look to claw back lost profits due to “rampant” discounting during the past 12 months. The move comes as consumers start spending according to new ABS data.
Terry Smart, the CEO of JB Hi Fi, said a new generation of smartphones, TVs, tablets and all in One PCs is set to push up prices: “We do anticipate price rises, we have a new range of smart TVs that are rich in new features including built in processors and new content capabilities. These TVs are priced higher than previous models. The days of big discounting are fast coming to an end. We will always deliver the best value deal” he said.

Several retailers have told ChannelNews they are cutting back on discounting. The marketing director of one major chain said “We are prepared to hold our prices but if one of the retail chains starts to discount heavily it may force other retailers to follow”.

“This is as much about retailers holding their nerve as it is vendors. The two have got to work together to deliver improved yields” he said.

Smart claims that vendors also need to hold their pricing. In the past vendors have been accused of dropping prices in an effort to clear stock or slow selling lines”.

Last week a senior Samsung executive claimed that one major TV Company was already discounting new stock in an effort to stimulate sales.

The vendor identified did not deny the claim. ChannelNews understands that the discounting related to volume and the savings have not been passed on to consumers by retailers.

This month Intel kicked off an intense marketing campaign for Intel powered Ultrabooks which are selling at a significant premium to traditional notebooks.

Retailers believe that the campaign will increase awareness across the entire notebook category with one Harvey Norman Franchisee claiming that some consumers coming in to look at Ultrabooks ended up buying a tablet.

Earlier today the Australian Bureau of Statistics revealed consumer spending has increased.

Retail sales rose 0.9 per cent in March, the most since April 2011 and much higher than the 0.2 per cent expansion tipped by economists.

Retail trade rose in the month to a seasonally adjusted $21.231 billion, compared with a upwardly revised $21.032 billion in February.

“March data show a revival in retail spending after growing, on average, below trend for over a year,” said Moody’s Economy.com analyst Katrina Ell to the Financial Review.

“It is too early to suggest retail spending is on the mend as this is the first upbeat data point in months.”

For the three months to March, retail spending rose 1.8 per cent, the ABS said, better than the 0.4 percent pace tipped by economists for the quarter. The result was also better than the revised 0.5 per cent growth recorded for the final three months of 2011.

Personal accessory retailing which includes smartphone and tablet purchases was up 1.6%.

JP Morgan economist Ben Jarman told the Financial Review  the results  showed the Australian economy is in a better position than previous data had suggested. Building approvals rose 7.4 percent for the month, erasing most of the previous month’s drop.

”In retail trade we have the strongest number for at least a year, which is surprising given the context we’re looking at, with falls in consumer confidence and growing concerns about the global economy again,” Mr Jarman said.

”So it runs contrary to that, but if you look at the breakdown, there are some broad-based improvements,” he said.

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