TV Repair Recession Ending?
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Recently on Al Leatherman’s list, a post was made wondering now that Bernacke has stated the recession is over; When could the independent service industry expect see a recovery.
I predict near mid-month November of this year. |
My analysis of the data begs the conclusion that other than low margin crap, consumer electronics sales will be at or slightly above last year. Which sucks. The U.S Department of Commerce data advises that inventories are very low. Shippers such as Union Pacific are showing shipments are 1/2 of last year’s. Which explains why dock deliveries are low. Pre-order estimates from the dealer’s buyers for 2009 at CES were abysmal. Which means that the product availability for the holidays is going to be stressed. Sales order fullfillments are also down. Low margin crap means low profitability. The last quarter Best Buy (BB) missed it’s dividend mark but they revised upwards their advisory on sales for the last quarter. I translate that to mean while sales dollars are up, profits will tank.
The greater fear is that if the consumer decides to buy electronics - and the shelves are bare by December it will be ugly in Best Buy Land. White goods is expected to be way up year-over-year. If you only have money for one - what do you spend it on. A refrigerator or a flat panel? I guess it depends on if you are married. China-Korea has maintained their manufacturing output while Japan, Inc. has scaled back to estimates to be prudent. If the dealers start to run out of product they will have to pay huge transportation costs to get the products on the shelves on short notice. The dealers will have to make a choice - jack up the prices to preserve margins or take the hit. I predict they will jack up the price. Either way for both the manufacturers and the dealers it may turn out to be a worse year than last year.
Why mid-November for our industry? My personal experience is that the consumers are edging back to quality over price as it regards to new TV purchases. They have glutted themselves on the cheap flat screens and have discovered why they are cheap. In addition I have been hearing that they are now asking to see the written warranty first in stores. I have anecdotal feedback from salesmen at BB and Conn’s. Internet search sources advise that when brand names are searched > 40% add the word “warranty” immediately after the brand name. Last year it was < 10%.
I predict they will fix their 3 year old Mitsubishi rather than replace their 1 year old 50 inch $995 flat screen that crapped out on them 20 days after the warranty expired. I further predict that Japan, Inc. will win out in sales and profitablity over China-Korea. Maybe not with boxes shipped, but with profitability which in this grump’s opinion is more important.
Those independant service providers who survive this devastating summer will be in a position of strength.
A very excellent report.
I sure hope so, it is geting had to keep technicians busy. I suppose 1 man service centers are steady but anymore han that we ae down 34% from last year this time.
Well, well, well, Grumpy. You don’t make this sound too gloomy. I like it. In the short term, I hope BB chokes a bit. Not that I want to see another one bite the dust, but, BB has been detrimental to the Independent Servicer. I am not a big fan of Geeks.
I would like see Japan make a decent come-back as well.
I disagree with the assumption that Bernacke is making. I believe everything the government has done recently, will prolong this a minimum of five years, and will highly likely take ten years till we start seeing growth. That is, if national debt is brought under control, and the current politics don’t last over four years. I do believe service will continue to grow regardless, but it won’t be warranty, IMO.