Television digest with electronic reports (Jan-Dec 1954)

Trade Report December 4, 1954 TRADE ALERTED AS INVENTORIES PILE UP: A potentially dangerous inventory buildup, particularly at retail and distributor levels, has been allowed to develop in last 2 months, normally a time when TV stocks should be going down. The situation impelled one of industry's most knowing authorities this week to warn of possible dangers ahead if high production rate continues to outstrip public demand. Annual rate of TV production jumped from 7,500,000 sets at start of Sept, to rate of 11,000,000 sets in Oct. and Nov., whereas retail sales are at rate of about 7,000,000 a year, he said. Consequently, industry's inventories increased by about 100.000 in Oct. — virtually all at retail level — in a month which normally sees an inventory decrease of 150,000. Same pattern continued in Nov. , with estimated inventory increase of 150,000 — largely at distributor and retail levels. Total industry inventories at end of Nov, are estimated reliably at about 2.200 . 000 — considered uncomfortably but not dangerously high. But our informant fears that unless output is sharply curtailed in Dec. to more realistic pace, the industry may suffer perils of dumping and fierce price-cutting in first quarter of 1955 — reminiscent of first 1951 quarter following TV's record production year of 7,463,800. Prospect is that total 1954 output will come close to that figure. Annual going rate of TV production has increased 45% in less than 3 months, creating imbalance between output and retail sales, he pointed out. "Only a few months ago," he stated, "the industry seemed to be achieving a favorable balance between supply and demand. It had kept its pipelines filled to a prudent level and it had avoided overproduction. Suddenly serious oyerproduction has become apparent." He suggested this situation be brought to attention of trade in time to do something about it. Thanks to availability of RETMA statistical data, he said, set makers can analyze such information in the light of their own experience. Spottiness of retail sales was becoming increasingly evident even before the warning about inventories was sounded. From key metropolitan centers like New York, Chicago, Los Angeles and Philadelphia have come reports that extraordinarily high retail sales were tapering off as early as first of Nov. A trade spokesman stated this was part of national trend to buy Xmas TV gifts earlier than usual, and opined that Nov. sales will be less than Oct. and that Dec. sales will be less than Nov. Disposition of consumers to buy up into slightly higher-priced categories (Vol. 10:43-44) has also been at least temporarily reversed, according to the same reports. Diminished volume of sales seems to be once again concentrated at low end. * * * * * TV production totaled 173,968 week ended Nov. 26 (a 4-day week because of Thanksgiving holiday), down from record 243,703 in preceding week and 215,420 units week ended Nov. 12. It brought Nov. output to about 850,000 vs. 560,197 in Nov. 1953. Radio production totaled 250,519 (93,078 auto), compared to 314,557 in week ended Nov. 19. Nov. output was about 1,100,000 vs. 1,050,000 in Nov. 1953. RETMA revised 10-month production figures this week in report tabulating output of 5,654,791 TVs and 8,040,230 radios, compared to 6,208,803 TVs and 11,201,656 radios in corresponding 1953 period. Of total TV receivers, 1,085,742 were equipped at factory with uhf tuning facilities. Oct. TV output was 921,476, of which 161,431 sets were uhf-equipped. Oct. radio production was 997,788. The uhf figures are particularly significant because they mark continuation of an upturn which began in Sept. (Vol. 10:48). October production of uhf-equipped receivers set a record for any month this year — as did Sept, output — in number of units, but not in percentage of total output. In Oct., more than 17.5% of total receivers manufactured were factory-equipped with uhf tuners, compared with 14.4% in Sept, and 14.2% in Aug., the low point for the year. 14