Entertainment evolution
New electronics continue to create furniture opportunities
By Tom Edmonds -- Furniture Today, December 26, 2004
High Point — If you think entertainment is hot now, get ready for next year, because that's when activity in the category really will be sizzling.
Entertainment has been a solid furniture category for a couple of decades. But it tends to go postal when something extraordinary happens in terms of product advancements on the consumer electronics side.
The recent evolution of TV technologies has been extraordinary, creating a bushel basket full of new shapes and sizes, most of which don't comfortably fit in old entertainment centers or wall systems. More than a few words have been expended here this year describing the ramifications of wider, shorter and thinner television monitors, thin-profile sets and high-tech silver finishes.
Well, prepare yourselves because the plasma is about to hit the proverbial fan. And furniture sellers who want to participate in this market will have plenty of opportunity — as long as they can keep pace.
Flat-panel sets are on nearly every consumer's wish list. According to a recent survey by the Consumer Electronics Assn., an industry trade group, a flat-panel television is this season's most desired holiday gift.
But as much as people want them, fairly few have pulled the purchase trigger. Flat-panel TVs still represent less than 10% of the 30 million televisions that were expected to be sold this year. Of the flat-panel sales, 73% are liquid crystal displays or LCDs and 27% are the larger plasma models.
That may soon change as a tidal wave of LCDs will soon hit the market, a result of several new factories in Korea, China and elsewhere in Asia. LCD manufacturers, like the makers of other consumer electronics, are investing heavily to expand their capacity, hoping to grab market share. Each new LCD plant costs $1 billion to $3 billion, which is why major manufacturers such as LG and Philips are teaming up to build new TV factories.
Using reasoning that is not unfamiliar to the furniture industry, they figure earnings will come later, although the flat screens have already been highly profitable for several companies. Profitable or not, the increased capacity will certainly lead to further price cuts. Industry analysts are projecting that prices for flat-panel LCD TVs will drop by as much as 30% by the end of 2005. The prices of plasma sets also are expected to slide substantially.
This is a development that electronics retailers probably won't want to tout during the holiday shopping season. They have already cut prices and are hoping to spur traffic and sales right now, not next year. Most forecasters say that televisions will be a strong Christmas performer, and they expect sales to remain strong and even accelerate through 2005.
For the furniture industry, though, the prospect of continued strong sales of fancy new televisions, now and next year, can be seen as nothing but a positive. When it comes to entertainment furniture, as well as home office, nothing drives sales better than a buying frenzy for the connected electronics.
The question yet to be determined is what sort of furniture consumers will choose to put under their new televisions. Many of the thin-profile plasmas and LCDs can be mounted directly on the wall. Furniture producers and retailers hoping that the vast majority of consumers will be uncomfortable with that solution; even if the consumer is willing to do that, the furniture folks say, furniture still will be necessary for the DVD player, VCR, amplifier, video-game player and speakers that go with the TV.
Wall mounted or not, the new televisions will almost certainly be displayed more prominently than their predecessors. The sleek futuristic styling and silver finish of the new sets, as well as their less bulky proportions, seem to represent a status statement that does not need to be boxed and hidden behind cabinet doors. In fact, with the wide-screen 16:9 aspect ratio of most new models, doors are increasingly difficult to build for the largest models.
One exception to that rule aplies to thin-profile plasmas and LCD monitors. The mechanized cabinets that raise and lower the television to and from viewing position have already proven to be active sellers at retail, where they fetch several thousand dollars. The pop-up cabinets may cost nearly as much as the plasma television, but they're so cool that they are attracting impulse buyers who are comfortable paying big bucks for a piece of furniture that allows their television to make a dramatic entrance.
Another furniture opportunity exists with rear-projection sets, which will no longer be designed as free-standing consoles. Even with screens up to 70 inches, these new models, with their digital light processing or DLP technology, are considered tabletop sets. Of course, the table they sit on top of will have to be wide, more than 60 inches, and probably fairly low to the ground for optimum viewing. These consoles or credenzas may not produce furniture sales tickets equal to a full-blown wall system, but a large number of consumers will soon need them.
With millions and millions of these televisions likely to be sold over the next several years, the furniture opportunity seems obvious, which is why both producers and retailers have been busy beefing up their assortments.
At retail, the electronics superstores, such as Best Buy and Circuit City, do not seem content to ignore a potential add-on. Both have updated and upgraded their selection of flat-pack stands and audio towers with glass-and-metal models selling for about $1,000. Home-theater specialty stores, too, are displaying their high-end electronics in matching wall systems and stands.
For furniture retailers, entertainment will undoubtedly generate sales even if the store does nothing more than throw a few stands and cabinets out on the floor. But the merchants who are really making hay with the category, as usual, are the ones who put energy into their displays and promotions. Whether the store sells electronics or not, having a television with a movie running on the sales floor adds sex appeal not just to the entertainment stands and cabinets but to the home theater seating that frequently sells with it.
The video phenomenon contiues to grow as a dominant aspect of life for the vast majority of Americans, who also need furniture to fully enjoy their new toys.
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Home entertainment evolving to house new electronics
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Analyst: Flat-panel TV boom offers big opportunity
May 11, 2006
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