Good Partner or Bad Problem: It's Up to the TV Manufacturers
One message was clear last month as CE manufacturers rolled out new
policies they hope will close the open vein that continues to bleed revenue and profit from their dying TV businesses: Independent retailers will no longer work with vendors that do nothing to stabilize TV prices.
You can't blame the retailers. Their anger and frustration has been
building up for years as cut-rate online sales by e-tailers have gone
unchecked, big-box chains received favorable pricing and incentives,
and manufacturers have wasted millions of dollars marketing 3D
technology that the public wasn't ready for and that national
retailers weren't capable of demonstrating. Sony, Panasonic and Sharp
ended their fiscal year with combined losses of about $17 billion
dollars. Race-to-zero TV sales strategies greatly contributed to those
To help staunch the bleeding, Sony and Samsung instituted unilateral
pricing policies, while Panasonic and LG are preventing the sale of higher-end products through third-party online marketplaces, all in
attempt to stabilize pricing and increase margins. The new policies
are laudable, but they are self-serving. Retailers have been calling
for such changes for years, but manufacturers have turned a deaf ear.
Now, they don't have a choice. They have to change.
Retailers we've spoken to say the changes are for the better. But each
one is wondering how long the changes will last. They've witnessed
similar actions in the past, only to see them vanish as manufacturers
break their promises to make a number, oftentimes with no regard for
stability or profit. The practice may have helped e-tailers, but it
only hurt brick-and-mortar retailers that had to continue pumping
money into sales training, merchandising and marketing.
The retailers who told us they'll stop supporting the manufacturers
that don't support them are right. TVs continue to play a key role in
retail, but they are becoming less important. As we heard at the
recent BrandSource/HES and Nationwide buying group summits, retailers
are finally focusing more on connected solutions, affordable home
control/automation, and a variety of audio solutions. They are
changing the layouts and merchandising schemes in their stores, giving
less space to TVs and more to these new solutions. Retailers are also
putting more focus on e-commerce and social marketing strategies, and
mobile applications that will help them compete more effectively
Every CE retailer realizes the tough climate will continue. But
they're also excited by the possible traffic, sales and profit these
new opportunities and strategies will generate. It's now up to the TV
manufacturers to decide whether they want to be a partner in those
opportunities or a problem that is better left behind.