NEW YORK - As more and more consumers consider switching to digital television sets this holiday season, retailers are cutting flat-panel TV prices to help them make up their minds.
In fact, the competition for this promising market could turn into an all-out price war.
Even though rising interest rates and soaring gas prices have caused concern that Americans will curtail their shopping, electronics retailers expect advanced televisions to be among the fastest-selling home entertainment products this Christmas.
Digital sets, mainly with flat-panel plasma or liquid-crystal display screens, have won admiration for their superior picture and sound as well as for their ultra-slim size.
The main sales obstacle has been their price tag. The cost of many new high-end models is 10 that of a boxy conventional TV.
To spur purchases, retailers will probably resort to aggressive markdowns, analysts said. At the same time, manufacturers have been ramping up supply, which could further lead to lower prices at the cash register.
"A lot of the pieces are in place for some significant price movement on flat-panel TVs this Christmas," said Stephen Baker, director of industry analysis at NPD Group.
Wal-Mart Stores Inc., the world's top retailer, is already jockeying for a slice of the expected windfall from the shift toward digital television.
Encouraged by its push deeper into the American living room with cut-price DVD players, Wal-Mart has begun featuring a wide range of cut-priced flat-panel TVs -- including its in-house ILO brand -- among its online pre-Christmas promotions.
As with the DVD players, Wal-Mart is trying to hasten mass-market adoption of flat-panel TVs, a technology that so far appears more geared to specialty chains that are experts at selling complex products.
In August, the average price for a 42-inch high definition plasma TV was about $4,038, according to NPD Group. By contrast, Wal-Mart's Web site is promoting a similar television at $2,994. As the company puts it, that marks a "price rollback" of 26 percent.
But the number of households with flat-panel TVs is still below 10 percent, so industry observers say most potential buyers are still tech-savvy "early adopters" who base their preferences on brand quality and product features rather than just price.
As a result, specialty chains like Best Buy Co. Inc. and Circuit City Stores Inc. should do well because of their knowledgeable sales forces and wide assortments, analysts said.
Best Buy Chief Executive Brad Anderson told Reuters the lure of flat panel TVs was probably the single biggest reason the top U.S. electronics retailer was optimistic about this holiday season.
The company is touting free shipping and savings of up to 10 percent and 18-month "no-interest" financing on select TVs.
Sears, Roebuck and Co., the largest U.S. department store chain, will also make a big push for flat-screen TVs, including projection sets, this holiday season, a spokesman said.
Some prognosticators say prices on some 42-inch plasma HD TVs, for example, could dip below $2,500 before the end of the year.
TV makers like LG.Philips LCD Co. Ltd. and Samsung Electronics Co. Ltd. are saddled with a panel oversupply -- particularly of LCD TVs -- as they pump billions into production, fueling a decline in their margins as prices fall.
Computer makers Dell Inc. and Hewlett-Packard have also entered the flat-panel TV fray, promoting an expanded assortment of private-label sets for the holiday season.
The Consumer Electronics Association expects factory-to-dealer sales of digital televisions to reach 6.97 million sets this year, up 70 percent from 2003. But it sees less of an increase -- 62 percent -- for dollar volume at $10.5 billion.
"The prices are going to be pretty competitive," said SG Cowen analyst Joseph Feldman.
But with an ample supply out there, he added, retailers will probably source product at a lower cost, helping them to maintain their margins.
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