Best Buy’s TV Turnoff

Retailer Says 3D, Net-Based Sets Selling Poorly

By Todd Spangler -- Multichannel News, 12/20/2010 12:01:00 AM

TVs weren’t lighting up Best Buy’s cash registers on Black Friday.

The nation’s biggest electronics retailer blamed weaker-thanexpected results for its quarter ended Nov. 27 in part on consumer reluctance to buy more expensive 3DTVs and Internetconnected sets — such as Sony’s Google TV-based sets, listed at $1,400 for a 42-inch model — as well as price competition for lower-end TVs.

Quarterly revenue from Best Buy’s U.S. stores open at least 14 months fell 5% year-to-year compared with the company’s expectations of flat or modest growth.

While Best Buy lost some share to online retailers, TV sales in general have been soft.

In 2010, U.S. sales of liquidcrystal display TVs are expected to decline for the first time, by 1.2%, to 31.9 million units, according to iSuppli. The research firm attributed the dip to lingering economic concerns among Americans and the fact that manufacturers didn’t mark down LCD TVs, which account for more than 90% of sets sold, as they have in the past.

For Best Buy, “newer technologies like 3D and IPTV [Internet protocol TV] ... have been slower to take hold,” CEO Brian Dunn acknowledged on a conference call with analysts.

“I think there was confusion about 3D early,” Dunn added. “It was a little short on content... I think 3D will become top of mind as an important feature for television as we get into next year.”

While Best Buy is “quite pleased” with sales of advanced TVs at the high end, he said, “it is an adoption in the middle which we see as a next-year sort of value proposition for the consumers in the middle around 3D and IPTV.”

U.S. shipments of LCD televisions are expected to decline this year:

2008 24.5 million

2009 32.3 million

2010 31.9 million

2011 35.7 million

SOURCE: iSuppli, December 2010