Black Friday has come and gone, and the spectacular deals led to strong growth in units and even retail dollars, according to sell-through data from the NPD Group: unit sales of TVs grew nearly 16 percent, with 32” TVs growing 40 percent as their ASPs declined nearly 30 percent. And while the costs in terms of product and marketing expenses are fairly certain, the impacts on the overall TV business are less clear and possibly cause for concern.
A good example of the negative effects from the so-called “law of unintended consequences” could be the boost to the secondary TV market.
During Black Friday, Walmart promoted a 32” LCD TV from Funai (also sold under the Emerson brand) for $98, with a one-hour in stock guarantee. This promotion generated more than 1.5 million units of TVs sold. Given that most Black Friday door buster sales are of limited quantity models, with the intention of shifting the consumer to a more profitable model once sold out, the huge quantity available for this specific promotion is remarkable. Surely, the high level of 32” panel inventory we’ve been observing in the supply chain led to the strong availability, but could this promotion prove disruptive in other ways?
According to DisplaySearch’s Global TV Replacement Study, 32” is the leading size of flat panel TVs owned by consumers in the US; nearly 60% of households have a 32” or larger TV. So if so many consumers already own at least a 32” TV, why would demand surge so strongly for a 32” still? Some may be purchasing for a second room, and some may be upgrading from a smaller LCD or even still a CRT. However, many consumers may have simply treated it as an impulse buy, perhaps to turn around and sell for a small profit on the secondary market.
A quick check of Craigslist in 5 top markets reveals no fewer than 70 Funai or Emerson 32” LCD TVs for sale, brand new, in-box models that match what was sold on Black Friday, with prices ranging from $160 to $225. This doesn’t count the items that have been posted, sold and removed from listings in the almost 3 weeks since Black Friday and is only a small sample of the thousands of cities across the country. One has to question the value of deep Black Friday promotions when they are combined with large quantities of availability if they:
- Cannibalize sales of more profitable models on Black Friday
- Reinforce consumer behavior to wait for such sales in the future
- Fill secondary reseller markets with cheap products that also cannibalize potential future demand
Even if the primary effects are on lower priced TVs, and demand for larger primary TVs is not affected, it’s a pretty disheartening cycle.