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With price margins steady, CE helps bolster Black Friday


After last year’s brutal holiday price war on flat-panel TVs, retailers this year avoided drastic price cuts on Black Friday. And though some door-buster prices on TVs were impressive, they didn’t come close to the dramatic drops that were so common in 2006.

Instead, TVs were just part of a consumer electronics mix that was a primary driver of customer traffic on Black Friday and helped produce better than expected sales.

“We expected this new product cycle to drive traffic, and it did,” said Andy Hargreaves, a consumer electronics analyst with Pacific Crest Securities in Portland, Ore. “GPS systems and video games were hot products, and TVs and PCs continued to show lots of strength.”

Nevertheless, LCD and plasma TVs were prominent in nearly every Black Friday sale. The centerpiece of Best Buy’s sale was a 32-inch Dynex LCD-TV for $449, a $300 savings. It also featured a 42-inch Panasonic plasma for $899.

Circuit City, which suffered the most from last year’s flat-panel price wars, got back into the action with a Samsung 50-inch DLP high-definition TV for $799, a $400 price cut. And it had a 32-inch LCD-TV from Element for $399.

Wal-Mart, which spearheaded the 2006 TV price war, featured a Sharp Aquos 42-inch LCD-TV at Sam’s Club for $866.52. Target entered the fray with a 37-inch Olevia LCD-TV for $549 and a 19-inch Trutech LCD-TV with a built-in DVD player for $199. And Sears got in on the action with a $300 Black Friday price cut on a 42-inch LCD-TV from Sylvania for $899 and 32-inch LCD from Vizio for $598.

Overall, the price cuts were impressive enough to lure customers into stores, but didn’t come close to the kind of cuts retailers engaged in last year. And chains like Best Buy chose to highlight house brands like Dynex in their biggest promotions, instead of top-of-the-line brands.

“Probably the best example from last year was a door buster sale on a 42-inch Panasonic plasma that dropped the price from $1,700 to $1,100,” said Hargreaves. “This year, the same TV was priced from $1,100 down to $900. So on a dollar basis, the promotions weren’t even close.”

Retailers were also helped by new categories that took the pressure off TVs, like GPS navigation systems for cars. Sears cut the price on the Magellan Maestro from $249 to $149 on Black Friday, while Circuit City cut the price of its Mio Portable Navigation system in half from $199 to $99.

Digital photo frames were another emerging product category that was heavily promoted. Best Buy cut the price of its 9-inch digital frame from Dynex from $129 to $79 in a two-day sale, while Circuit City dropped the price of its SmartParts 9-inch digital frame from $169 to $69. Digital cameras were also a small part of this year’s sales, with Best Buy reducing the price of its Sony 7.2-megapixel camera from $149 to $99.

Laptop computers were another popular door buster item. Circuit City slashed $350 off the price of a Compaq laptop—including a mail-in rebate—that dropped it to $299. Best Buy countered with a $200 discount on a Hewlett-Packard laptop for $449.

Also in the mix were sales on high-definition DVD players. Sears sold the basic Toshiba HD-DVD model for $169 on Black Friday—down from a list price of $299—and Best Buy cut the price of is Samsung Bluray player from $499 to $399.

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