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Consumers Unlikely to Spring for Big-Ticket TVs


Look for steep discounts this holiday season.

If you're in the market for a big-screen, flat-panel TV, the holiday season is shaping up as a good time to buy.

Major retailers are likely to cut prices in an effort to get reluctant consumers to open their wallets, especially on low-end TVs. So far, sales look weak.

Some retailers are expected to package LCD or plasma TVs with a Blu-ray player or an audio system. This will save consumers the trouble of shopping around and putting the package together themselves, but it's likely to boost the overall price. That may not be helpful in a downbeat economy, when consumers are cautious about spending money.

However, sales could be helped by February's conversion to digital broadcast signals from analog, making old antenna-based TVs obsolete. A digital-to-analog converter will do the trick, but manufacturers and retailers hope many consumers will use the conversion as a reason to buy a new TV.

Lower prices could start showing up before Black Friday, the day after Thanksgiving, when many stores offer one-day bargains to kick off the holiday shopping season. For many retailers, this is make-or-break time, and strong sales can put them in the black for the year.

Prices could fall to about $400 for a 32-inch LCD and $600 for a 42-inch plasma TV, or about $200 off current prices.

However, bargains on Blu-ray players are unlikely, because the technology is still new enough to command a premium price. Look for prices starting at about $250, and don't expect steep discounts until next Christmas.

Unit sales of LCD TVs increased 22% in September compared with the same month a year ago, but that was down from the 28% growth in August and July's 32% gain, The New York Times reports.

On a weekly basis, year-over-years sales edged up 3% for the week ended October 18 compared with an 18% jump for the week ended September 20. The figures don't include sales at discounters such as Wal-Mart (WMT) or Costco (COST), but it appears consumers are hunkering down and holding on to their cash.

Home electronics can easily be cut from the family budget in an economic downturn. Surprisingly, consumer electronics haven't been pounded in prior downturns, creating at least a glimmer of hope among retailers.

But retailers expect lighter store traffic this year and that's almost certain to result in slower sales. Best Buy (BBY) says that it plans to hire 16,000 to 20,000 seasonal workers this year, down from last year's 26,000.

In September, Best Buy's same store sales slipped 2% from the year before.

Several manufacturers, including Panasonic and Sharp, will offer extended financing in an effort to get prospective buyers to spend.

Sony (SNE) and Sharp have introduced lower-priced products for big-box discount stores. Sony plans to market its M line of TVs at Costco, Target (TGT) and Wal-Mart.

Samsung, the largest seller of flat-panel TV in the US, believes buyers will move away from mid-priced models to entry-level and step-up equipment.

Buyers are expected to move away from the 42-inch screen to 30- and 34-inch models. This could make 42-inch screens "aspirational." If so, it looks like many consumers will put their aspirations on hold this holiday season.
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