Retail Observer

RETAILOBSERVER.COM NOVEMBER 2015 50 Doug Wrede Consumer Electronics Trends R etail preparations for Q4 have been well underway as the ever so important holiday season approaches. It's a key selling period for many retailers across the country and rightfully so, as it can make or break a year. Add to that, promotional activity seemingly starts in November and in some cases earlier and remains on high alert for the balance of the year. What's different about this year is the axis in which UHD technology and consumer awareness meet a "sweet spot" in pricing, creating a broader appeal to more consumers wanting to upgrade. The TV business for Q4 alone sits among the top three spots in both consumer intent to buy and largest revenue generating category in CE for the holidays. Before we hit Q4, it's important to understand how UHD has been performing. Economic indicators aside (unemployment, housing market, wage growth, etc…) total TV revenue has grown 2% in the domestic U.S. market from the previous year. With this, we've seen personal disposable income recover, and in some cases, exceed expectations and aid in the shortening of the TV upgrade cycle, coupled with UHD to make for positive results to what has been a challenging business for many years. While we're far from out of the woods and one year does not make a trend, there's optimism and growth in the forecast ahead. TV FORECAST BY TECHNOLOGY – UNITS Despite total domestic shipments forecasted to be down from the previous year (-3%), it's UHD shipments that we see continued growth and will likely more than triple in 15' to just over an estimated 5.4 million units. Even with lack of 4K content, consumer demand remains high for this technology on the faith of future proofing for the best possible picture. The majority of this demand and adoption is taking place in 50" and larger sets, while screen sizes 49" and below remain conservative with little upside. PDP is EOL in 2015, so it's left to LCD and OLED to generate the category volume. OLED will slowly ramp up volume as LG heavily invests in this technology going forward and global shipments are expected to reach 400k in 2015 and the market is predicted to reach over $7M units by 2019. TV FORECAST BY TECHNOLOGY – REVENUE Unlike TV unit shipments, revenue is forecasted to grow in 2015 in both total TV (LCD/OLED) as well as the 4K segment alone 2% and 120% respectively. Some of the key trends attributed to helping TV revenues stabilize and are expected to keep a slight growth for the balance-of-the-year and into 2016 are. 1. Unilateral Pricing–Although we expect commoditization to occur in this category, many manufacturers' have been able to institute unilateral pricing to help stabilize retails and help maintain margins. 2. Average Screen Size is growing–There's been a shift occurring in screen sizes 40" and above and gains continue to be seen all the way to 65" and larger. By the end of 2016, a 4% share increase is expected in 40" and larger screen sizes representing approximately 67% of all TV revenue. 3. Curved TVs–Opinions aside on whether you agree or disagree with the benefits to curved technology, its gaining interest and traction among select consumers and so far; multiple manufacturers are making a statement in this category with Samsung leading this charge and today, holds retail value. 4. Premium TVs–After years of price erosion and value TV offerings, a trend is emerging around performance. WCG (Wide Color Gamut) via better LED chips, thicker color filters and quantum dots are on the rise and are a technology storyline for multiple brands. The first generation of HDR-enabled TV's is here and discussions around higher frame rates for next generation broadcast standards are gaining interest. All things considered, expect a much bigger presence in UHD sales and marketing behavior for the 4th quarter. UHD will have a much bigger impact to retail holiday sales and carries a farther reach and opportunity than 3D and Smart TV have accomplished thus far. UHD SALES & PROFIT OPPORTUNITY FOR THE HOLIDAY SEASON Doug Wrede Director of CE for Nationwide Marketing Group (Sources: IHS, NPD, Display Search) RO

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