Ultra HD 4K TV’s Impact On the Independent CE Retailer
Average margins will be better. Bigger screens are our opportunity, because we have consultative selling floors and display facilities we need those margin-heavy products. It will also take other products with it. When you’re selling larger TVs, people are likely to add the audio experience to them. Our dealers need to be displaying this, even if it’s just one flagship piece; it will help everything else in the store sell. And it is demonstrably better. You can see the difference on big screens. And they’re starting at 80 inches plus. But it will help sell more 60-inch TVs.
Richard Glikes, President, Azione: UHD is an important category. Two reasons: It’s high tech and it’s expensive. And those fit right into our wheelhouse. Margins are better than conventional televisions because most of the sets are unilaterally priced or MAP, so they’re not discounted. Advanced technology is always good; our client base is early adopters and people with more money than time. And they want the best in Ultra HD, especially in 70 inches and up. Margins should be close to 30 points. But specialists’ break-even is somewhere between 34 and 36 points. TVs aren’t where they’ve ever made money, but it’s certainly better making $500 on a TV than $50, that’s for sure.
Tom Hickman, Senior Vice President, Electronics, Nationwide: Ultra HD is going to be very important to our members. It will start a new product technology cycle for us. Our guys are more advanced in the early-adopter stage because of our sales force. I don’t think it’s going to be a ton of sales this year, but it will be a considerable profit-driver. This year, we’ll get some early-adopter dollars and much, much higher margins. I read somewhere that it’s supposed to reach seven million units by 2015, so it should become naturally a more robust product with less ASP and less margin, cyclically, like everything else. Every time we have a demonstrable picture quality increase, we get a good two- or three-year run in ASP and margins. Our members are certainly hoping for a longer bell curve than a shorter one, like we’ve seen in some other technologies. I think the only reason it’ll be longer is because the price is still so high, and the R&D dollars that were spent to come up with it. How fast it goes to $9,000 for an 84-inch? I don’t know. We’re really proficient in this industry at eating our young.