The Advent Of The ‘New’ A/V Independent
By some estimates the number of U.S. independent A/V car and home dealers is less than 70 percent of what it was 10 years ago. Some believe there are half as many, the result of relentless price pressure from mass merchandisers.
No doubt there are far fewer dealers today than in the past, but what about the future? Here are two different scenarios:
Scenario 1: Downward price pressure continues taking margin, sales and independent retail market share with it. More independents go out of business while mass merchandisers increase overall market share, at least in the mid- to low-end of the market.
Scenario 2: The independent car/home A/V channel stabilizes while growth for some (but not all mass merchandisers) continues. Soon a renaissance occurs for a growing number of independent specialists who gain increasing market share in their respective markets.
So, if we’re betting, which scenario do you think will happen? Well, based on what is, I have to go with Number 1, but based on what could be, Number 2. In fact I will go so far as to say it’s not a question of whether or not the second scenario will happen, only when and by who.
Here’s why: Much (but not all) of the “growth” you see occurring among mass merchandisers - Wal-Mart in particular - is of the “nature filling a vacuum” order. It happens because:
- Circuit City and a few regionals went away, while…
- no other channel or retailer within a channel was ready to fill the void, at the precise time, and;
- Wal-Mart decided it wanted a bigger slice of the CE pie.
The perfect storm? In a way, but not the way you might imagine.
Wal-Mart correctly understands its limitations and works to its strengths. I will bet the company will stay the course, improving what it does, selling still more, just as it has in every other vertical it has entered. But there is a natural limit, and it isn’t the total market.
I hope Wal-Mart succeeds. Its involvement introduces millions of individuals to products they would never otherwise consider. Yes, I know there are retail alternatives ranging from the diminishing list of independents all the way to Best Buy, as well as a very short list of other national mass merchandisers. But with due respect to all of them, each of which has their place in CE distribution, none do all that should and could be done, things that can only be done by a “new” independent.
If you are an independent and feel you’ve lost business to Wal-Mart, Best Buy and other mass merchants, you’re trying to sell the wrong product to the wrong consumer, likely in the wrong way. Many (but not all) who buy their home/car A/V products at a mass merchandiser have little to no need to buy from you, presuming you want to sell them what the other guys offer. Your customers are those who are ready to move up, people who are ready for more functionality and greater performance, including the kind of pre- and post-sales support not available at Wal-Mart, Best Buy, and other mass merchant retailers.
But you’ve tried, you say, and nobody listened. I’m sure you did, including the fact that what you used to do brought you great success. But that was then and we’re talking now, and of greater importance, tomorrow. More than any other business you can name, yours is now unquestionably different, 10,000 percent different than in the past, and if you haven’t made the mandatory changes…
No one including me can tell you how to run your business. You are called independents for a reason and the things that make you so means one size does not fit all. However, I can provide a suggested framework for change, which you can then use as a template for reinventing your business. If you are reading this online, TWICE has included a link to a PDF. (Click here for link) Or you can call or email me and I’ll be happy to send it with no cost or obligation to you.
William Matthies is the CEO of Coyote Insight (www.coyoteinsight.com) and can be reached at wmatthies@coyoteinsight.com or at (714) 726-2901. Visit Business Wisdom at http://businesswisdom101.blogspot.com/
Carver commented:
Well, it took me a few days but I investigated my “aura” and found, I don’t have one. I thought I did and thought people had a positive image of my store, but it would appear they don’t. If that’s true, it won’t matter what the big guys do. I need to concentrate on what I do.
I’m going to work on it including giving a lot of thought to which manufacturers I want to work with in the future.
Aaron M. commented:
Many customers at the box store don’t know what the step-up options even are. We now sit in front of a Best Buy and it has been a boon. In a few minutes of conversation and demo, I can get them into a whole new world, often with the same product and prices as BB. But with better knowledge. They catch the bug and are mine from there.
The Elephant in your equation, though, is that the brands need to make up their minds. Are they in the game for raw, short term sales numbers or a long term, growing customer base? Many of them up to now swore by the latter, but the recession has exposed them as whores of the former. They always had been that way but were finally forced to admit it. Ultimately, it doesn’t matter how spectacular a persona our stores can create if we are being undermined by the “box flu” greed of the very brands we are trying to sell. Welcome to the downward spiral, CE-style.
Joe Nathan commented:
Many independants died off when manufacturers killed off Mid-fi products, and when mass market retailers started selling flat panel displays. Since video has never been a money maker for independants, the absence of products priced toward the middle market sealed their fate. As the middle class continues to shrink and the upper and lower classes grow, the retailers for the mass market and high end markets will flourish. The new AV independents will focus on high end.
Paul commented:
This encourages me, makes we want to reivent my business.
Robert Heiblim commented:
Hear hear! Bill is telling it like it is and is a great resource of help and advice. Change is the key to our CE industry so go with it or be a part of history. There is still a lot of history to make and no reason that independent retail, or small manufacturers cannot be part of it as long as they accept what is.
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