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TV viewing redefined

Stores are capitalizing on our desire to buy the latest and greatest set, and on our need to be shown how to best use it.

By MARK ALBRIGHT
Published September 15, 2006

Prices of flashy, high-tech TV gear may be plummeting, but Americans are spending more on digital sets than ever.

The average price paid for a new TV set has soared to $819 this year, up sharply from $578 in 2003, according to the NPD Group.

That's because people are trading up for everything from bigger and better pictures to sleek-looking flat-panel sets.

"Hardly anybody comes in the store who doesn't stop to look at the plasma TVs and check the prices," said James Bush, a Circuit City entertainment sales manager in St. Petersburg, which just installed a 70-foot wall of plasma sets. "That wasn't the case few years ago."

With rising demand and the fat 20 percent profit margins of digital TV, savvy retailers smell blood.

So they're overhauling the way they sell today's confusing array of TV choices while trying to morph into the trusted service force that's paid to link our new TV purchases to everything from home computers to iPods.

Look around: TV has taken center stage in stores this fall. Best Buy Inc. is expanding store floor space dedicated to TVs by a quarter and adding its high-end Magnolia home theater departments in the Tampa Bay area. At Sound Advice, four of the five demo studios that once showcased only audio equipment are outfitted with multiple home theater configurations. This month, Circuit City stores is expanding its TV display space by a third locally and launching firedog, a lime green-shirted team of computer and TV installation advisers and home troubleshooters.

It's Circuit City's answer to Best Buy's computer-oriented Geek Squad, but with the added knowledge of TV technology.

Even Wal-Mart, which is trying to become more relevant to higher-income shoppers, has made its push into digital TV a cornerstone of the effort. The Pinellas Park Wal-Mart stocks a 42-inch Panasonic HD set priced at $1,897 and a 61-inch Hitachi digital projection set priced at $2,597.

Americans are on track to buy 18.7-million digital TV sets this year. That's almost as many as the past two years combined. The Consumer Electronics Association forecasts unit sales will continue to skyrocket for at least the next three years.

New-fangled technology is not the only force propelling the trend.

Studies show that women have become a major influence in TV buying decisionmaking. While their husband may be a do-it-yourselfer, they know that calibrating and hanging a $3,000, 50-pound flat-panel set, then drilling holes to hide the wires in the wall is not for "I-don't-need-no-stinking-instructions" types.

"Today's flat-panel set is a far sleeker piece of decor that doesn't consume as much space as those projection sets that look like the monolith from 2001: A Space Odyssey," said Jim Babb, a spokesman for Circuit City. "But longer range, firedog is really about integrating all your in-home electronics into one linked system."

Consumers today are flocking to new ways of accessing music and video entertainment over the Internet. Many want their computers and iPods to play on the big home stereos and TV sets. A single remote can be programed to control all your home electronics, plus the lights and air conditioning.

So self-service electronics retailers, who pretty much left shoppers to their own devices during the late 1990s' computer boom, this time want to bond with customers in the high-profit service arena. They foresee every homeowner adding a "home electronics" guy to their list of odd job, plumbing and air conditioning repair people. The stores want to be Maytag repairman - by offering technicians' advice free in stores or making house calls where they charge by the hour, job or warranty.

Both Best Buy and Circuit City now charge for a house call to design a home system, but refund the money if enough products are purchased.

These days stores are stocked with a bewildering set of options: flat screen or flat panel? LCD or plasma? HD ready or HD tuner built in? How is 1080i resolution different from 1080p? Blu-ray or HD-DVD?

High-definition TV sets further cloud the picture. Higher resolution sets with 1,080 pixels are still priced at $2,000 and up. But 720 pixels can also qualify as digital.

"By Christmas, you'll see 720-pixel 35-inch sets as low as $700," said Stephen Baker, industry analyst for the NPD Group.

Walk into a Circuit City and a clerk will help you fill out a grid blueprint of your rooms and furniture. Then he or she will pick a set and design a system that "fits your needs."

Best Buy offers a similar service at its Magnolia home theater shops, which are being added to most local stores. The chain is spreading its Magnolia shops to more than 300 of its 740 U.S. stores this year.

"Magnolia adds high-performance audio and video technology to our high-end home theater products," said Bryan Blitch, who manages Magnolia and the TV departments at a St. Petersburg store. "It used to be all about the size of the picture. Now it's all about the convergence of everything and wowing people."

That could start with a $10,000 Pioneer Elite HD TV. Then Magnolia customers are tempted with such gear as $1,500-a-pair Vienna Accoustic speakers, a $1,000 electric current conditioner and a motorized 92-inch HD projection screen that scrolls down from the ceiling.

Privately, however, many TV sales people concede they must overcome more than customer sticker shock.

On the downside, they acknowledge a paucity of programming that showcases the flashy sets. The crystal-clear pictures in the store models are conventional satellite or DVD images. But shoppers are frequently unable to get the same quality without proper installation, add-on accessories or by paying extra for cable or satellite. Then there is the skimpy lineup of quality high-definition TV programming available across the vast cable universe.

Costco recently decided to offer installation in a test because so many customers were bringing improperly installed sets back for a refund.

"TV is no longer a take-it-home and plug-it-in purchase," said Nick McCoy, who covers the industry for Retail Forward, a retail consultant.

Also new to the TV buying game is the relentless march of technology and opalescence. Buyers are used to buying a new TV every 10 to 15 years. The industry is determined to shrink that to every five to seven years, so today's TV may not fit whatever the next big technology brings.

"There is a huge opportunity for TV retailers for the next two or three years," said NPD's Baker. "But after that it's a crap shoot depending on how technology changes."

Mark Albright can be reached at albright@sptimes.com or 727 893-8252.

[Last modified September 14, 2006, 23:23:10]