Five years ago last month, the government launched the “cash for clunkers” old car trade-in program, an approach that consumer electronics giant Samsung and BJs Wholesale Club resurrected on a far smaller scale as a means to entice consumers to trade in older TVs for savings on newer sets.
The Samsung-BJs three-week event offered up to $150 in additional savings on three tiers of TV models with 1080p HD resolution for consumers wo trade in old TVs, excluding wooden and projection sets, which many still be in use or gathering dust in their basements (or garages).
The Samsung-BJs offer raises an important question for TV makers –can a cash-for-clunkers TV trade-in program do for Samsung, LG, Vizio, Sony and Panasonic, etc., what the innovative automobile effort did for new car sales? More and bigger programs are needed before we’ll know for sure.
Here’s the Deal
The program offered $25 off sets up to 40 inches, $75 off 46-55-inch sets and $150 off 60-inch and larger sets. Remember those amounts are in addition to larger price cuts on some new Samsung sets and on top of BJ’s typically lower-than-retail chain regular prices.
As a result – three examples – a 32 inch LED 1080p Samsung set for $299.99, a 50-inch LED 1080p set for $694.99 and a 65-inch LED 1080p set for $1,399. All are “smart” meaning they can be connected to the web for OTT service access (and much more) and the larger two are 120Hz units.
Though this particular trade-in/trade-up program was short-lived, these efforts are a potentially core means to move consumers up to bigger and better sets and should also result in many consumers buying a second HD set for their homestead, whether it’s for a bedroom, sports cave, child’s room or the abode of a high-school/college grad.
Should Samsung and others embrace such trade-in/trade-up programs in an optimal manner when the yearend holidays grow near, you may see efforts like these catch on widely and spur upgrades to sets not otherwise considered, and perhaps attract some to ultra HD (UHD) TV sets.
Is Timing Everything?
A key factor in the success or failure of a TV trade-in program is timing. The mid-summer Samsung-BJs effort may have been an experiment of sorts, and perhaps well-timed given that consumers typically shop for new and bigger sets before football season begins, in advance of the yearend holidays and soon after they pass.
How Much Savings?
Small savings in and of themselves won’t move much product, but the savings need not be epic.
Consider the case of the Commonwealth of Massachusetts.
The state’s annual three-day tax-free holiday, during which the state’s 6.25 percent sales tax is waived for purchases of up to $2,500, drives product sales. The “holiday” has proven successful in past years in spurring spending even though there’s no state sales tax in neighboring New Hampshire. TVs and other consumer electronics devices are top targets for shoppers. One furniture company and TV seller is offering to double the savings realized by waiving the sales tax.
Recipe for Success
Given that savings are core to consumers’ buying habits with TVs and far beyond, what would it take for a TV trade-in version of cash for clunkers need to succeed? The ingredients seem simple, but it’s bringing them into play to create a powerful program that presents the real challenge. Here’s what you need:
-One or more motivated TV manufacturer. More is better as it creates competition.
-One or more motivated retailers and/or wholesale clubs. Again, the more the merrier – and the bigger the better for reach purposes. Take Walmart over Joe’s TVs.
-Attractive actual savings, minus gimmicks. The automobile practice of having one car on the lot at the advertised low, low price won’t work, or at least work well. This is about sales, not just about getting people in the store’s doors.
-Price Cuts & Trade-in Combo. What better way to maximize interest than to do what Samsung and BJs did recently – combine sale prices with the trade-in savings. This gives shoppers the impression that they stand to get even more bang for their buck, and old TV sets.
-In-store savings. While the mail-in rebates gave way (thankfully) to the gift card era, neither will work for immediate in-store savings. The goal is to leave the store with a new TV set, plain and simple.
-Supply. Though greater demand than supply is most always good news for sellers, the “Black Friday affect,” consumers arrive to find no remaining inventory at the attractive sales price – only frustrates potential buyers. Though this is a one-day example with big sale items part of a gimmick, running out of products/models in advance of the program’s conclusion needs to be avoided.
-No tricks. Trade-in programs that offer savings on discontinued, low-tech/no-tech and key feature-missing TVs are risky business. Fool me once, shame on you….The quickest way to torpedo a trade-in program is with negative word-of-mouth. Buyer’s remorse is lethal.
-Smooth-as-silk. Make sure all parties involved in the trade-in sales process have their heads in the game. Delays/confusion/complications in any aspect of the shopping and buying process will strangle a program. No supervisor visitors, cashier uncertainty or calls to customer service (while the transaction is in progress) are needed. Keep it simple.
-Cost Containment. The government-run car scrapping program of 2009 resulted in over 690,000 dealer transactions according to reports. While that number is impressive, clearly the benefits have to outweigh the costs for TV set makers and their distributors to launch even limited programs. The federal government will not be backing a TV trade-in program to help defray costs, etc.
What to Watch
Beyond keeping your eyes and ears open for trade-in programs, Samsung and BJs are worth tracking. Why? The due ran a trade-in program last year that offered a maximum of $75 off for old TVs. This latest effort from the duo offered a max of $150. Samsung has also amassed trade-in program experience with wireless phones. Been-there, tried-that knowledge is gold.
BJs Wholesale Club is a regional chain in the east with 201 clubs in 15 states from Maine to Florida. And its members are already paying an annual membership fee to shop there. It’s not no-frills, but perhaps the best aspect of shopping there is that nobody is lurking nearby in hopes of upselling you on anything or selling you any accessories. Their product protection plans are impressive and simple.
Nobody from BJs will ask you what they have to do to put you behind “the wheel of a new car.”
Will Samsung next partner be, or next program include, a name retail chain? Best Buy ran a trade-in program a few years ago that was labeled by some as a gimmick. Will the national entity get back in the game, perhaps with a program that’s more like the good old cash-for-clunkers old car trade-in program?
Founder, Fast Forward Thinking LLC
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