NPD Group Blog » More margin, less mania drive Black Friday promotions

More margin, less mania drive Black Friday promotions

Wednesday, November 26th, 2008
By Ross Rubin, Executive Director, Industry Analysis

Hi everyone. It’s my pleasure to welcome you to NPD’s official blog with this inaugural post. As some readers may know, I’ve been blogging for a few years now and am delighted to see NPD proper join the conversation alongside our DisplaySearch colleagues.

My fellow analysts and I will use this forum to offer our perspective on issues affecting our dynamic industry. Our viewpoint is shaped by NPD’s unique point-of-sale and consumer information resources, which help our clients and us understand what is happening in the world of consumer technology and why. It seems appropriate to use Black Friday, the most disruptive day in electronics retailing, as the catalyst to launch our entry into this disruptive medium.

The Consumer Technology Holiday Spotlight Report, now going out to some NPD clients, included the results of a fourth-quarter survey that asked consumers about their holiday plans. Questions focused on popular holiday categories, including flat-panel TVs, notebook and desktop PCs, portable navigation devices, digital cameras, MP3 players and digital picture frames. NPD also asked consumers about what would most motivate them to shop for doorbuster specials or to shop later in the day on Black Friday.

NPD found that the largest segments of likely buyers said they definitely or probably would completely abstain from categories they intended to purchase due to the economy. I’ve already shared some thoughts on the results of this research in my most recent Tech on Deck column.

NPD also found that budget-conscious consumers will be more likely to be on the lookout for specific products than great bargains in general. Looking at Black Friday promotions from major CE and mass merchant retailers at shopLocal.com, it’s clear that retailers are being more conservative then they were in the days of $199 notebooks back in 2005 and 2006.

Large flat-panel TVs remain a popular doorbuster, with Best Buy offering a 720p 50″ Panasonic plasma TV for under $1,000, stealing much of the thunder from the now less status-associated 40″ and 42″ models. Circuit City has gone even more upmarket with a 50″ 1080p Panasonic plasma TV for under $2,000 and a 52″ Bravia with 120 Hz MotionFlow for just under $2,800.

In the less brand-dominated mid-sized screen segment, Best Buy has a 32″ Dynex LCD TV that breaks the $400 barrier and mass merchants are promoting smaller sizes. However, retailers don’t seem to be betting that many of the late adopters will be swayed into buying even sub-$250 LCD televisions in lieu of government-subsidized digital converter boxes. As in years past, we’re also seeing portable navigation devices featured, some — like last year’s Black Friday favorite TomTom One — at under $100, and the almost cliche $59 digital camera.

Two products not strongly featured as doorbusters, but which we expect have potential for strong growth off admittedly small bases this holiday season, are netbooks and Blu-ray players. While all the usage cases remain unclear for netbooks, consumers now have access to a broader range of affordable ultaportable PCs than they ever have. And as for Blu-ray, entry-level prices are now almost a third of what they were a few months ago. The critical price gap with upconverting DVD players has never been smaller, which should help Blu-ray players serve the HDTV cross-sell role that retailers have longed wanted from the format.

All in all, more rational pricing is the order of the day in which economic volatility is the highest in decades. As this holiday season shapes up to be the most difficult one in years, major retailers are willing to cut down the size of the lines in front of the store to welcome higher value consumers into it.

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