A touchdown for TV sellers
Despite economic jitters, Super Bowl XLII is still expected to result in a 50% rise in big screen purchases.
NEW YORK (CNNMoney.com) -- Despite all the noise about a belt-tightening underway, one industry survey estimates that consumers will buy 3.9 million new televisions in time for Super Bowl Sunday.
That's up more than 50% from last year, according to the National Retail Federation's (NRF) 2008 Super Bowl Consumer Intentions and Actions Survey.
On average, the NRF estimates that Americans will spend $59 on items related to the Super Bowl on Feb. 3 up from $56.04 late year to total $9.5 billion. That includes 1.8 million pieces of furniture, up 38% from last year, as well as those big TVs.
Since the Super Bowl is the most-watched television event of the year, it's regularly a big driver of new television purchases, according to the Consumer Electronics Association (CEA).
But wouldn't an economic downturn disrupt that trend? Not necessarily, said Candace Corlett, retail expert with WSL Strategic Retail.
"If you give consumers a good reason to spend, they will," Corlett said.
Although consumer surveys conducted by her firm over the past year indicate that Americans believe they've been in a recession for quite some time, that "feeling" hasn't been enough for them to clamp down on big-ticket purchases altogether.
"It's not like people are feeling poor," said Corlett. "We don't have soaring unemployment and that's supporting spending."
To that end, she said many consumers probably waited for TV prices to drop some more after the holiday season. "The Super Bowl becomes the extra inducement for the pricey purchase," she said.
But there's a catch for consumers. Yes, prices on 42-inch flat-panel screens have dropped. The problem is those aren't the sets people want - they're craving newer 50-inch and wider screens, which aren't discounted just yet.
Lucas said it's a false perception that TV prices, especially for the bigger size models, will plummet. "We don't anticipate this will happen. We're so sure of this that we are offering a 90-day price guarantee on our TVs," he said.
Therefore, super bargains could be hard to find and consumers themselves may be to blame, warned NPD analyst Stephen Baker.
"Retailers typically run sales to get more people into their stores. If consumers are coming in anyway, why would retailers feel the need to discount heavily," said Baker.
But price won't be the main focus for TV buyers.
"Flat-panel TV prices have more or less stabilized. The big difference this year versus last year is that the TVs are bigger at a more affordable price," Baker said.
Instead, he said consumers will focus on competitive packages built around the TV, such as free products, installation services, delivery and long-term financing offers.
Also known as bundling, analysts say both Best Buy and Circuit City (CC, Fortune 500) are heavily advertising these package deals - instead of just the TV - because they help to boost overall profit margins.
Lucas talked up Best Buy's "HD Complete Advantage" package.
"Bundling is key for us because we think a TV purchase is an emotional purchase for lots of people," he said.
Lucas said the plan rewards customers for "setting up their TV correctly." The "reward" for Best Buy is that the retailer hopes the bundling options will also lower return rates.
So if they buy a flat-panel TV costing $1,000 or higher, Best Buy will give a discount on the television if customers also purchase a DirectTV subscription, a Sony (SNE) PlayStation 3 or other add-ons. The total could run up to $700 in discounts, depending on how many add-ons and how expensive that TV is.
Given that both the Super Bowl teams are from the Northeast, Lucas said the retailer has seen a spike in TV purchases in New York, Boston and nearby regional markets.
He said home theater installations spiked 25% in the last week just in the New York area.