“Nobody can argue with the concept of taking care of our planet, reducing greenhouse gases and preventing the pollution of our water—especially in developing countries,” stated Stewart Muller, president, Philips Consumer Electronics NA.

In his presentation at CES’ Consumer Electronics Supply Chain Academy (CESCA) on January 9 in Las Vegas, Muller will offer practical information on how the politics and business issues involved in recycling and returns has changed dramatically over the past few years.

“The ‘Green Movement’ has captured the heart and minds of the consumer and industry alike,” said Muller. “When we make TVs that perform very well with regard to power consumption, contain no hazardous materials such as lead, and use as little packaging as possible, we will now get credit for that in the marketplace and retailers will place that product over a competing product.”

Taking the example of TVs, politicians have been called upon to address the recycling issue, “California implemented a great solution in 2004 that has worked well,” said Muller, explaining that the state has implemented a small point of purchase fee on new TVs, which serves to pay for the recycling of old sets. “The idea of charging a manufacturer based on the volume (measured in pounds) of their products that are disposed of is inherently flawed,” said Muller. “There are many brands of CRTVs that are no longer in business and there are many brands that have been purchased by other companies.”

“The program in California has worked,” said Muller. “The TV business is robust in California and consumers have not complained. More importantly, the volume of properly recycled covered devices has grown from roughly 24 million pounds in the first year — 2004/05 — to over 155 million pounds for 2006/07 according to the California Integrated Waste Management Board. This same type of program is also being used successfully in most Canadian provinces.”

In the adjacent concept of returning a product to a retailer, for Muller, the three most important aspects of controlling the "profit leak" associated with returns specifically with flat TVs are: (1) product quality, (2) the out-of-box experience and (3) the availability of hi def (HD) service. The fourth factor concerns the commercial policies of retailers. 

“As HD LCD technology has matured, the chances of any type of product defect have become extremely rare,” said Muller. “A couple years ago many returns were the result of consumers assuming that simply because they had an HDTV that they had HD service.” With more prevalent awareness of the concept of HD and how it works, consumers are more aware of its parameters and thusly fewer TVs are being returned.

In general, regarding returns, “there have been more "gatekeeping" measures at retailers, like Electronic Serial Number Registration (used heavily at Wal*Mart),” said Muller. “More product feedback sessions by manufacturers before product launch have also been helpful.”

Another successful strategy is simple customer communication. For example, Muller interacts with his customers, the large U.S. retailers, on a daily basis. “I communicate with the head merchants at these retailers to discuss potential promotional opportunities and the performance of recent ones,” said Muller. “More long-term, we discuss industry trends and creative ways to improve the shopping experience for advanced technology products such as hi-def TVs.”

His job also requires day-to-day communication with internal Philips employees. “Within Philips I meet regularly with the product groups to determine both product line direction and volume requirements,” he said.

“There is absolutely no room for error in forecasting the flat TV market,” Muller emphasized. “Profit margins are too tight and price decreases happen too rapidly for any mistake in this area.”

Fortunately for Muller, it is also the most exciting category in consumer electronics. “Growth is strong, the category gets enormous attention due to the upcoming digital transition in February 2009 and, most importantly, the TV experience — meaning high definition — is orders of magnitude better than what consumers have ever experienced in the past,” he said.