Vendor Consolidation
By Steve Smith -- TWICE, 10/8/2007
Consolidation is not an unfamiliar concept in the electronics and appliance industries. It has happened, most notably, in retail for years: Tweeter buying all those chains; Best Buy buying Magnolia Hi-Fi; and all the famous regional and national chains that bit the dust in the 1980s and 1990s (Silo, Lechmere, Montgomery Ward, Highland, Luskin's, Tops Appliance, Newmark & Lewis and Brick Church, just to name a few.)
Earlier this year the divesting of JVC by Matsushita enabled the former to take the first steps toward merging with Kenwood. But Sharp's recent investment in Pioneer came out of left field for many and just showed how difficult it is even for top-tier consumer electronics manufacturers to make it as margins get thinner and thinner in HDTV and just about everything else the industry sells.
Mikio Katayama, president/COO of Sharp, said one of the main reasons for the deal is new technology development. He said, "In order to cover core technology and know-how that we do not have, we believe a strategic business alliance is needed." (See "Sharp Invests In Pioneer To Jointly Develop Products" at www.TWICE.com.)
As I mentioned in a blog when this story broke, a couple of times over the past year or two, retail executives have privately told me, "We appreciate the support of ______ and _______, but the way the industry is changing in five years we may be carrying products from completely different brands we haven't even heard of yet."
At the time I thought it was over-the-top posturing. In the past week or two I thought about many of those aforementioned retailers that have closed and looked back at the mid-1980s when I first started to attend the NATM Buying Group meeting. Some of those chains were founding NATM members. Its main TV lines were RCA, Zenith and Magnavox. The brands are still around, but the companies aren't.
Dramatic, disruptive change — in technology, distribution channels and industry players — is not a new phenomenon in consumer electronics. But it doesn't mean that anyone ever gets used to it.
TWICE Selects its Excellence In Retailing Winners
It's that time of year again for us to look back at the past 12 months and honor the best in electronics/appliance retailing. Costco (Best National Retailer), Starpower (Best A/V Specialty Dealer), P.C. Richard & Son (Best CE/Appliance Dealer), Newegg (Best Consumer Direct Dealer) and Sony (Best Vendor Retailer) are all being honored for their unique contributions and outstanding performances in the past year. (See p. 18.) One of the winners in own backyard, New York's P.C. Richard & Son, will open its 50th showroom this week and celebrate its 98th birthday. In an industry notable for change, the continued excellence and longevity of this chain is laudable. Congratulations to P.C. Richard and all of our award winners for a job well done.
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