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Buying Group Roundtable : The Impact of UHD 4K TV

March 2013 By Nancy Klosek
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The buying group executives we interviewed for this year’s annual roundtable don’t all agree on surefire strategies their dealer members can use to increase profitability. But they do agree the industry has turned a corner, and that better times are ahead.

Indicators of a recovery include stronger housing and remodeling markets; pricing stability and a slight increase of TV margin thanks to UPP; a resurgence in higher quality audio; decent appliance sales; and a rebounding luxury market.

Of course, all of that can’t offset the lingering maladies of the recession, including a sluggish economy, high unemployment, razor-thin TV margins, and low consumer confidence. But buying group directors aren’t sitting on the sidelines waiting for a miracle.

They’re rallying their members around smarter, more targeted marketing initiatives; training in all areas of best practices; and rolling out new back-office systems, Internet tools and e-commerce strategies to help build omni-channels and compete against all forms of e-tailers.

For this installment of the roundtable, executives talk about the impact Ultra HD 4K TV will have on the CE and custom install channels. Make sure to check out next month’s issue for more from the roundtable, or go to Dealerscope.com for exclusive installments.

Dealerscope: How important will Ultra HD TVs be to the sales and profits of your members this year? What’s the average margin?

David Workman, Executive Director/COO, Progressive Retailers Organization (PRO Group); Executive Vice President, ProSource: A category like this is important because the type of dealer we represent does its best work acquiring a large share of an emerging technology. So while Ultra HD is expected to be a very small part of the TV business overall this year—depending on how manufacturers position it, and I have reason to be very optimistic about that based upon some preliminary price-point estimates—it could offer a considerable amount of upside in the television category for 2013.

Margins are always going to be better than what we would see as normal flat-panel pricing. Even today, in the step-up portion of the market, you’re lucky to get maybe 30 or 31 points out of the very best product currently available. I would expect Ultra HD margins would be a small premium to that, but not 40 points. I just think, because of the cost of manufacturing, even though it’s a premium price point, that we are not going to see the types of margins we saw when the original high-definition products were introduced.

 

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