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Electronics Goes HDTV

May 23, 2006 | Author: Ibex Marketing

I’ve been watching as CompUSA keeps giving more floor space to LCD and plasma and rear-projection TVs, but the latest news is that Radio Shack is jumping on the HDTV bandwagon. This reverses the move in 2002 that dropped televisions in favor of smaller consumer electronics devices. Radio Shack plans to phase in the new strategy over the next few years, as it will take a lot of inventory just to place samples in all of the company’s 7,400 stores around the country.

Some analysts are concerned that the average Radio Shack store is too small to offer sufficient space to display large TVs, and to offer enough choices. The company plans to limit store inventory to 32-inch and smaller models, though larger models will be available through online shopping.

As prices continue to fall, and demand for the 40-inch and larger models increase, I have to wonder about Radio Shack’s plans to limit the size in the stores, but they have to do something to respond to the space limitations. Models 35-inches and larger are projected to amount to more than a third of all sales, and competitive pressures will drive profit margins down on the smaller sizes. Maybe there will be enough for Radio Shack to make a meal on, but it doesn’t look like a sure win strategy from this vantage point.