by Anthony John Agnello | March 30, 2011 12:14 pm
Retail sales were up in the U.S. over the course of February, marking the eighth straight month of growth. Total sales for the last full month of winter amounted to $387 billion, a bump of 8.9% year-over-year. That’s good news for beleaguered manufacturers and retailers alike.
People are buying things again, apparently. They are not, however, buying televisions. For tech stocks like Philips (NYSE: PHG[1]), Sony (NYSE: SNE[2]), and Panasonic (NYSE: PC[3]) — not to mention electronics retailers like Best Buy (NYSE: BBY[4]) and Walmart (NYSE: WMT[5]) — slow television sales have been a constant pain since the Great Recession. But consumer indifference to new models is especially trying lately.
Philips issued a warning on Monday morning to prepare its investors for first quarter losses in its TV division, causing a nearly 2% drop in share price to around $22. Last Thursday, Best Buy stock fell 5%[6] based on tepid earnings, the cause of which was slow television sales.
Nielsen reported in a November 2010 study that, after years of slow adoption rates, more than half of U.S. households owned a high-definition television. Consumer spending may be up compared to post-crash lows, but it’s going to take quite a bit to convince the average person to buy a new 3D or Internet connected television when they have to take the plunge on a 720p set.
Technology alone won’t be the deciding factor — these companies need to frame new technology around service and ease of access. Here are three strategies that will help improve stocks like Sony, Philips, Panasonic, and Best Buy.
Apps, not Internet: Forrester Research CEO George Colony coined the phrase “App Internet[7]” in a Thursday interview with Bloomberg. The executive was describing Apple (NASDAQ: AAPL[8]) and its iPhone, whcih have created a consumer environment where people no longer surf the Web but access it through applications providing a specific service. Think about a Netflix (NASDAQ: NFLX[9]) app that streams video, or the Amazon (NASDAQ: AMZN[10]) Kindle app to download books. No surfing or browser required, just an application. Television makers are already moving in this direction, but not fast enough. Sony and others need to stop branding their products as “Internet TVs” and push the apps instead.
De-emphasize 3D: Retailers and manufacturers alike need to recognize that the public is simply not interested in 3D home entertainment yet. The cost and inconvenience of viewing via glasses guarantees that even early adopters will need heavy convincing to buy in. Even when glasses-free technology becomes more affordable and common in the next eighteen months, that’s no guarantee that sales will pick up. Decreasing production of 3D sets and refocusing on low cost HDTV adoption could help firm up TV sales
Use what is selling: Retailers need to focus on how TVs integrate with products that are selling well. Best Buy’s quarterly earnings report highlighted how mobile devices are performing best of all the company’s wares. The burden is on them to educate customers on how their new iPad or Droid phone can be augmented with apps that allow them to work with certain televisions, even when it’s as simple as an app that turns their smartphone into a universal remote control. When consumers see utility in a new television purpose, even when it’s just perceived utility, sales will improve.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello[11] and become a fan of InvestorPlace on Facebook.[12]
Source URL: https://investorplace.com/2011/03/tv-sales-tech-retail-stocks-best-buy-bby-wmt-aapl-pc-sne/
Copyright ©2024 InvestorPlace unless otherwise noted.