Confounding the prediction of many pundits of a major decline in flat-panel television sales in early 2009, the U.S. and Canadian market continued to expand in the first quarter, as consumers chose to invest in home entertainment, according to iSuppli Corp.
Shipments of flat-panel televisions, i.e., LCD and plasma sets, in the United States and Canada amounted to 7.8 million units in the first quarter of 2009, up 17.3 percent from 6.6 million during the same period in 2008. Consumers managed to increase their television purchases by gravitating toward less expensive models, low-priced retailers and value brands, according to iSuppli.
“In the post-9/11 era, a new phrase entered the lexicon: ‘cocooning,’ a trend among fear-struck citizens to avoid travel and remain in the safety of their homes,” said Joe Abelson, vice president, displays, for iSuppli. “Amid the current economic downturn, a new wave of cocooning has hit, with recession-wary U.S. consumers eschewing travel, staying home and watching their televisions. However, they still are finding enough money to buy new flat-panel sets that offer superior pictures and larger sizes.”
Low-priced Realignment
This trend is impacting the television market on many different levels.
“There has been a major shift in flat-panel television purchasing price points,” observed Tina Tseng, analyst, television, for iSuppli. “In the first quarter of 2009, 68.9 percent of U.S. television purchases were of sets priced less than $1,000, according to a survey conducted by iSuppli’s U.S. Television Consumer Preference Analysis service. This is up from 62.8 percent in the second quarter of 2008.”
U.S. purchases of flat-panel televisions priced in the $600 to $999 range rose the fastest among all price bands, increasing by 3.6 percent in the first quarter compared to the second quarter of 2008. In comparison, purchases of flat-panel sets priced at less than or equal to $599 increased by 2.6 percent. Meanwhile, U.S. purchases of sets priced from $1,000 to $1,499, from $1,500 to $1,999 and at more than $2,000 declined by 1.7 percent, 1.3 percent and 3.1 percent, respectively.
For many U.S. consumers, buying a lower-priced flat-panel set means going for a smaller set. Because of this, sets sized 32-inches and smaller went into short supply starting in April. However, larger televisions—40 inches and bigger—are coming down in price as premium brands slash prices to match those of their value competitors.
Wal-Mart Windfall
As U.S. consumers flock to lower-priced flat-panel televisions, they also are embracing lower-cost retailers, particularly Wal-Mart.
No.-2 flat-panel television retailer Wal-Mart in the first quarter of 2009 accounted for 22.3 percent of all U.S. flat-panel purchases, up from 13.8 percent in the first quarter of 2008. Purchases at No.-1 Best Buy remained largely flat during the same period on a percentage market-share basis. This put Wal-Mart just one tenth of a percentage point behind Best Buy in the first quarter of 2009, closing the gap dramatically from 9 points in the first quarter of 2008.
Hand in hand with Wal-Mart’s rise is the ascension of the retailer’s featured television brand: Vizio.
Vizio’s first-quarter 2009 flat-panel television shipments in the United States and Canada rose to 1.4 million units, up from 829,000 in the first quarter of 2008. While Vizio took the No.-1 position in U.S. and Canadian LCD-TV sales in the first quarter, when plasma is added in to create the total flat-panel segment, Vizio came in a close second behind Samsung.
Learn More About US TV Consumer Preference With iSuppli's Latest Report, Consumer TV Buying Behavior Remains Price-Driven >