Independents' Strength
By Steve Smith -- TWICE, 8/22/2005
Whenever I'm asked about the state of electronics/appliance retailing by Wall Street analysts or the consumer press it usually involves the condition of Best Buy or Circuit City stock prices, how and why Ultimate or Tweeter are in their respective financial states, or when Wal-Mart will take over CE retailing and Home Depot and Lowe's will do the same in major appliances.
As you know, things are a little bit more complicated than that. But when you try to explain how competitive and influential independent retailers are in this business to industry outsiders, you can tell even over the phone that their eyes are glazing over.
It might be a well-told story, but for the unenlightened there is finally a black-and-white report showing the strength of independent retailers in this marketplace. Consumer Reports issued the results of a survey of 6,000 subscribers which shows that independent appliance retailers offer better service and product selection and good prices compared with the publicly-held chains. (See story, p. 1.)
While this report concerns the major appliance business, you know the same dynamics apply to consumer electronics retailing. The plaudits given to independents in this report include their hands-on knowledge of products and the way they treat their customers during the entire sales experience, which was judged to be superior to major chains.
Now, national chains as a group do provide strong pricing and product selection to compete and beat those regional chains that may have 10 to 30 locations in a market. That's because the regionals and the nationals have the same problem: recruiting and keeping good sales help.
Which is why Best Buy embarked on its dual Magnolia Hi Fi and customer centricity efforts, Tweeter wants to become more of a “services-based” organization and Circuit City wants to stress more category-focused marketing vs. what it calls its previous “brute force” approach. And everyone gives lip service to custom installation, whether in upper or lower case.
All of which brings us to what has been going on in August. Three major buying groups have held or will hold their summer conventions this month. Nationwide (see p. 1) and MARTA (see p. 4) both report strong, profitable sales as the fourth quarter looms. I dare say that when I go to Las Vegas and cover the BrandSource convention later this month that they will probably report the same type of performance, or better.
To do this, independents that sell consumer electronics and majaps have had to roll with the punches the industry and the economy delivers and continue to evolve as the nationals become more and more sophisticated in their merchandising and marketing.
As these buying groups show and our “Retailers To Watch” feature in our Aug. 8 issue illustrate, national chains may get all the attention from outside the industry, but those in the know realize how valuable they remain in educating consumers as well as making a good profit for themselves and their suppliers.
Fame may flatter the ego but strong sales mixed with healthy margins keep independents' (and suppliers') businesses competitive.
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