Don’t underestimate the resilience of the television.
Yes, millions of Americans are cutting the cord to cable. And yes, many millennials are sometimes bypassing the boob tube to watch video on laptops and tablets.
But that hasn’t dampened the American appetite for bigger and better-looking TVs, a zeal that will be on full display this week in the nation’s stores. The week leading up to the Super Bowl, the most-watched TV event of the year, is also often one of the biggest for TV buying.
“They have all of their friends over,” said Luke Motschenbacher, merchant director for TVs at Best Buy Co., the nation’s largest electronics retailer. “They want to show off, and we want to help them show off.”
Earlier this month, executives at Richfield-based Best Buy cited healthy TV sales as one of the drivers of its 2.6 percent increase in U.S. same-store sales during the holidays, its best performance during the key shopping period in years. And Minneapolis-based Target Corp. says it saw a double-digit increase in TV sales during the holidays, boosted largely by bigger-screen TVs.
Until personal computers became common in households in the 1990s, the ebb and flow of the TV business shaped not just the fortunes of retailers like Best Buy but the entire electronics industry. Today, TVs tend to be overshadowed by smartphones, tablets and computers, but consumers around the world still buy more than 200 million new sets a year.
While TV sales in the U.S. have been on the decline in recent years, the business is heading into a sweet spot this year, one that hasn’t been seen since flat-screen models took off nearly a decade ago. The reason: TVs with better-looking pictures, called ultrahigh definition, have been dropping in price to the level where more people are buying them. Such TVs are sometimes marketed as “4K” because they have nearly four times the resolution of the current top digital TVs, which have 1,080 pixels on a horizontal line.
“This is the year for 4K,” said Paul Gagnon, an analyst with research firm IHS.
While 4K TVs are still a small fraction of the overall TV industry, his firm estimates that shipments of those sets will more than triple this year to 4.9 million units in North America, up from 1.1 million units last year. The average price for a 4K TV will drop another 46 percent to around $1,000 by the end of the year, IHS says.
Last year, Best Buy had about a dozen 4K models in its stores around this time to try to entice Super Bowl upgraders. This year, Best Buy has over 30 4K TVs on display in most of its stores. And if the store has a Samsung or Sony store-within-a-store home theater experience, 4K TVs dominate those spaces.
In another sign that 4K TVs are becoming mainstream, Target now has one 4K TV for sale in select stores. It’s a 49-inch model from LG that was on sale last week for $999.99, company spokeswoman Jamie Bastian said. Wal-Mart also began selling a handful of 4K TVs last fall.
During the holiday season, shoppers for TVs tend to focus more on bargain prices and smaller to midsize screens, analysts say. But when it comes to the Super Bowl, consumers tend to go big.
According to the firm ShopAdvisor, shoppers buying TVs for the Super Bowl are expected to spend 55 percent more than those who bought TVs around Christmas. And this year, buyers plan to spend about 17 percent more this year than last year.
While it may seem surprising that one sporting event can in itself drive a big TV buying spree, analysts note it’s often more of a catalyst to convince people who have been thinking about upgrading.
About 53 percent of U.S. consumers are looking to buy a TV in the next three years and 14 percent are looking to do so within the next six months, said Brian Markwalter, senior vice president of research at the Consumer Electronics Association.
“It’s kind of on their mind anyway,” he said. “The Super Bowl pulls in that group that’s already interested.”
Of the 184 million viewers expected to tune in to the Super Bowl next Sunday, about 8.8 percent plan to buy a new television for it, according to a survey for the National Retail Federation. That percentage has been growing every year and is the highest ever in the survey’s nine-year history.
While the 32-inch TV is still the most popular size in terms of units sold, it has been losing ground to bigger screens in recent years. During the holidays, for example, while the overall TV market was flat in terms of units sold, sales of TVs 50-inch and larger grew 58 percent, according to the NPD Group.
The smaller screens have been more vulnerable to being abandoned by people who stream video on laptops, tablets and smartphones. Still, there is a limit on how big some consumers are willing to go.
“Once you get to 60 inches and over, you start running into other factors such as how much space will it take up on my wall,” Gagnon said.