In reporting weak first quarter financials, the president of Circuit City announced that the national retailer intends to “simplify the selection” of HDTVs. This could mean that the company intends to stock fewer brands. If that’s the case, it could help start the expected industry shake-out.
Some say that there are too many different brands vying for shelf space. It’s already difficult to get retail distribution, but it could get much tougher if other retailers follow Circuit City’s example. The top brands — such as Sony, Panasonic, and Sharp — are likely to remain in the stores. Some low-priced third-tier brands may also benefit, as retailers try to woo price-sensitive customers with bargain offers. The brands in the middle are the ones most likely to get squeezed, such as Toshiba, Mitsubishi, and Hitachi. If these lose their place in the retail channel, it may make it difficult for them to continue to compete. And less competition is likely to reduce the downard pressure on prices, as well.
As a result, it will be interesting to watch the ad circulars for the next few months to see if the retailers start pulling back from the broad variety of HDTV models they now offer, and try to narrow their stock to target some more specific sizes and price points.