US retailers resumed their annual ritual of attracting bargain-hunting shoppers with special deals on the day after Thanksgiving. The shopping day has lost some of its luster through dilution to the rest of the week or even the rest of the month and the rise of online shopping, but it is still an event that brings out special deals for TV, and sets a benchmark for shoppers during the rest of the TV season and the rest of the year.
From one industry perspective, Black Friday represents everything wrong with the hyper-competitive, price-fixated US TV market. US TV prices, especially on Black Friday, are routinely the lowest in the world (although prices in China, if you could subtract the VAT, would be quite similar), even though the US produces not a single display panel and assembles very few TVs. What the US market lacks in proximity to suppliers, though, it more than makes up in economies of scale as both a national market and in the scale of national retailers. Big US retailers like Wal-Mart, Costco, can arrange deals for tens or even hundreds of thousands of TV sets to be sold on a single day, and these deals inevitably attract TV suppliers into giving heavy discounts.
I can recall early in my career when Black Friday first made an impact on the US TV business in the late 1990s. Wal-Mart ran a Black Friday deal for a 13” CRT TV for $99, the first ever possibility for a consumer to buy a color television for under $100. The next year, the same price could get a 19” CRT TV, and over the years the products have continued to get bigger and better, with the price points going even lower. While Black Friday promotions include all range of product categories, inevitably TVs gather some of the greatest attention in news reports and pictures of the days’ sales, as shown in Figure 1 from last year.
Figure 1: Black Friday Shoppers Grabbing the Best TV Deal
Source: Business Insider
Here are some of the deals offered at the lowest “Opening Price Points” (OPP) this year for several screen sizes this year.
Several takeaways from this list:
Figure 02: Operating Margins of TV Divisions of Major Brands
Source: DSCC Quarterly Display Supply Chain Financial Health Report
While LGE has been able to sustain high margins on the strength of its position in OLED TV (and the huge MDFs from LGD) and Sharp has improved its profit margin after restructuring following the Foxconn acquisition, most TV makers have seen operating margins fall substantially in 2017, with Chinese brands TCL, Hisense and Skyworth falling to near break even or operating losses.
Black Friday is often known for these OPP deals, rather than sales of more upscale TVs. At the lower price points, these products are affordable for every household budget in the US, and the typical Black Friday shopper is by nature the most price-oriented. Nevertheless, the biggest TV brands get into the action as well, offering special deals on more upscale products:
Some observations for these premium set deals:
Although the OPP deals for Black Friday have been one-time events in the past, the deals for higher-end sets are likely to persist past the Christmas season and into the New Year. These deals tend to peak in mid- to late-January, just before Super Bowl Sunday.