Summary
Market analyses focus on mass market/big box sales. Influence and impact of specialty retailers. Redefinition of consumer electronics sales.
Analysis
A recent article in T.W.I.C.E. (This Week in Consumer Electronics) reported on a study released by JD Powers Associates and Market Force offering the analysis that consumer electronics retailers (aka big box stores) offered customers more brand recommendations than mass retailers (such as Wal-Mart and Target).
While I understand that the study was exclusive to these two types of retailers, it begs the question of what role specialty retailers and smaller, regional consumer electronics chains are currently playing in today’s television market – and what their role may be in the near- and long-term home entertainment environment.
By inference, if not a stated analysis, the JD Powers/Market Force report seemed to conclude that customers were benefited by the recommendations received at the big box stores as opposed to the mass retailers. The report pointed to services such as installation, financing and delivery from the box stores, as opposed to low price and return policies from the mass retailers.
Were one to base an opinion solely on this study, it could be easily concluded that the best place to shop is a big box store. I fully understand that this study was exclusive to these two categories of retailers and did not exclude the small specialty stores and chains. But I fear that a study such as this, and reporting on the study without any commentary dismisses the core businesses that built the business from which the box and mass merchants are now profiting and excelling.
The landscape of home entertainment sales has changed dramatically in the last year. Circuit City is gone as is the regional specialty chain, Tweeter. Others are suffering and may well be on the brink of bankruptcy or shutting down. It is a situation created by myriad influences including questions of management, shrinking profit margins, lower customer overall sales and the fundamental fact that HDTVs are no longer luxury items, but commodities.
I have been a part of the consumer electronics business for a long time – as a customer, as a journalist and as a retail salesperson. I’ll date myself by admitting that my first BetaMax cost me something in the order of $1,200 in the mid-1970s.
In the early ‘80s I interviewed a consumer electronics executive who had been a leading force in the introduction of VHS decks when he unexpectedly announced his retirement. He essentially said he was leaving the business because it was no longer exciting and interesting. To him, the VCR was no longer a technological innovation. It had become a commodity. “Like a toaster,” he said. “And I don’t want to sell toasters.”
There have been a number of technologies that have become toasters over the years: camcorders, CD players, digital cameras, flat screen tube TVs, DVD players, recorders and more. It is the nature of the consumer electronics business that new products arrive, excite the marketplace and ultimately become toasters – or become toast. (Somewhere in my basement is a Laser Disc player and a box of discs, and a CED player, a VHS two-piece camcorder and a few more dinosaurs of our technological-driven desires.)
Today’s toaster is HDTV.
The fact that JD Powers and Market Force would study HDTV sales exclusively in big box/mass market retailers attests to that fact. And the exclusion of the retailers that paved the road for today’s marketplace further defines HDTV as a commodity.
But what does this mean to the specialty retailer? Are they also dinosaurs? Are they – those that remain – destined for the fate of the Tweeters and Circuit City’s? Do they serve a role in today’s consumer electronics market? Can they profit? Can they survive? Is there a place in the consumer electronics marketplace for the retailers that developed and established it?
Perhaps.
The high-end retailers have traditionally served the early adopters, and outside of a few, questionable examples, there is no latest-greatest technology or product on the horizon (with apologies to OLED and 3D-Stereoscopic HDTV). At the same time, the better of these retailers have also succeeded and excelled by adding value to their sales thru customer service, and building a trust and relationship with customers far beyond the Powers/Market Force categories of price matching, installation, delivery and return policies and their like.
The challenge facing the specialty retailer is to find a way to redefine what it does, and what it sells. The profit margins they once enjoyed are gone, but the customers they serve are still there.
If a specialty retailer looks at Wal-Mart, Target or even Best Buy as their competition, I believe they are destined to fail. The answer is not in the competition. It is in each individual business model and plan – and toss in a touch of bravado and a dash of inspiration.
Success, or even survival, will not be easy – especially in today’s economic climate. But those who wish to dismiss this small, but incredibly influential component of today’s consumer electronics industry do a disservice to what they have accomplished, and – I suspect – will redefine this industry.
If you want to sell toasters, sell toasters.
There are still enough (of us) who will still sell dreams.
