TV analyst shares his insights.
One of the world’s leading TV analysts’ claims that retailers can capitalise or they could capitulate on the plunging prices in the LCD TV market.
IHS principal analyst Paul Gray (pictured) told Appliance Retailer in Shenzhen this week at the launch of CE China that there is an oversupply of the LCD panel components that go into making LCD televisions.
“There is a huge glut of panel capacity at the moment, so prices on panels are tumbling,” Gray said.
“And by panel this is the display module that goes into a television with the audio system and the chips and so on to create the finished product.
“So television manufacturers sourcing the raw piece of glass with the liquid crystal fluid in it are essentially get a size class bigger than they did a year ago for the same money – which is roughly 10 inches. In other words, the TV manufacturers are sourcing a 50-inch panel for the same price of 40-inch a year ago – and the same goes for a 40-inch for the same price as a 32-inch a year ago and a 60-inch for the same price as a 50-inch a year ago.
“This means the whole market could re-set to a size bigger, but the question is what do retailers and consumers do when they see that these prices have fallen dramatically? Will this trigger consumers to wait when they see prices falling fast as they think there is more to come?
“When the consumer comes in expecting to buy a 32-inch TV, and realise they can buy a 40-inch TV for the same price, will they trade up and will we see size growth accelerate? Or will they still buy the 32-inch and leave some money in their pocket?
“There is no right answer. It will depend on what country you live in and what the consumer habits are like as to what the consumers do. But it also depends how retailers promote it as well. An executive from Amazon UK recently told me there is no such thing as price erosion on TV, people just buy bigger TVs and spend the same amount of money. For retailers, that is a huge problem if suddenly you have got to store and shift boxes with 60-inch TVs in them compared to 32-inch TVs,” he said.