What Tweeter May Be Saying About Specialty A/V Retailing
November 11, 2008
Most everyone who remembers the heyday of specialty audio/video retailing is saddened by the loss of Tweeter.
At its peak, Tweeter — and the various specialty retailers that it acquired — were quintessential specialists who sold performance-oriented products, educated customers and did the demo. But that wasn’t enough for Tweeter to survive.
In Tweeter’s case, the post-mortems keep rolling in. Some contend the 94-store, 17-state chain spent too much on acquisitions, over expanded, and stumbled in integrating all of the disparate business practices and corporate cultures of the companies it acquired. Others say the chain blurred its image, trying to bridge a gap between Best Buy and independent specialists. It took a cookie-cutter approach to merchandising, not accounting for regional market differences. It focused too much on low-margin flat-panel displays even after the big-box stores aggressively entered the market. Others say the stores lacked the passion of the owners who sold their stores to Tweeter.
Perhaps, however, there’s a bigger issue looming behind Tweeter’s demise: the slow decline of A/V specialty retailing. It’s far more challenging for an A/V specialist to survive in the modern consumer electronics era. Maybe the specialist business model isn’t totally a thing of the past, but the attrition of specialists over the past two decades points to a business model that only a hardy few can execute.
Only 10 to 15 years ago, midsize cities were home to three to four specialists, one industry veteran said. Before that, there were many more. Now you might find one.
One challenge for specialists is staying visible in an era when big-box retailers flood the market with advertising and promotion, driving huge amounts of traffic into their stores. Specialists, even regional specialists, just can’t compete like a Best Buy for consumers’ mind-share. Lots of people are interested in high-performance audio and video, but they don’t know where to find it.
As specialists’ store traffic dropped off in the wake of aggressive big-box advertising, many specialists cut back their advertising budgets, further reducing traffic, creating a downward spiral and never getting much of a chance to show people what they can do. Likewise, Tweeter stores suffered from low store traffic, marketers tell me.
With stores unable to drive traffic in, many specialists turned to custom home installation to build sales, in some cases getting out of retail locations altogether to move into office parks. Others adopted a hybrid model, as Tweeter did, maintaining their retail storefronts while diversifying into custom. Many of these retailers found out that custom’s volume couldn’t support the overhead of a retail storefront, and they went out of business. Like Tweeter.
The Internet is also contributing to the attrition of specialists. I’m not necessarily talking about Internet sales, although that’s certainly a factor. I’m referring to consumers who educate themselves by browsing through the vast array of information available to them from their desk at home. For many consumers, it beats driving from store to store to tap the expertise of commissioned salespeople.
Specialty A/V retailing is a channel that peaked long ago. Is there a continuing role for A/V specialists in the future? Please send us your thoughts.
Posted by Joseph Palenchar on November 11, 2008 |
Comments (16)
Industries:
Electronics/Appliance Retailing
January 8, 2009
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingCarl C commented:
January 8, 2009
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingCarl C commented:
About three months ago I went into my local Tweeter store looking
to purchase two audio components. I was shocked to learn Tweeter
had all but eliminated carrying the excellent lines previously
carried and I only saw higher end A/V components. I recall saying
to the store manager "Tweeter has made a possible fatal error in
switching to practically all A/V and not including otherwise
exquisite audio only components"
November 19, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingRetailGuru commented:
I disagree with most of the comments surrounding this topic. What I
believe you are really seeing in the current market is the failure
of companies to grow, evolve and innovate their own respective
founding principles in favor of trying to be more like their
biggest perceived rival "
November 19, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingRetailGuru commented:
November 18, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingBryan W. commented:
November 18, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingBryan W. commented:
November 18, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingBryan W. commented:
The very nature of the word "speciality" implies smaller and more
expensive. The problem wasn't the growth of the specialty
retailers, it was the need for manuracturer's to grow. The
speciality chains simply could not sustain the necessary growth the
manufacturers required to meet their own financial plans and as
large national chains grew, they were left no choice but to expand
into big box. Once that happened, and consumers could shop the
brands more effectively, then the speciality retailers were
instantly 3 to 5 points of margin disadvantaged, often more. There
was simply no way for them to meet the scale and efficiencies of
supply chain, warehousing and other logistics costs of running
their businesses either, relative to the big box retailers. The
specialty businesses had neither the resources to build the
logistics infrastructre, nor the in-house expertise required for
such things. More costly in the front end of the store and more
costly in the back end of the store, the business model is what
killed them. It's just basic business economics. Long-term growth
and profitability are not for those who want to stand in the
middle. That is where speciality retailers ended up. Too small to
gain the real efficiencies of the big box chains and too big to
keep costs low enough to survive. This has happened to almost every
other form of retailing, by the way. It's not unique to consumer
electronics. Just look around at the retail landscape. How many
mid-sized retailers are left in any retail channel or industry?
Only a precious few. It's just not a sustainable financial model
and that is the brutal reality of the free market economics.
Nothing more.
November 18, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingBryan W. commented:
The very nature of the word "speciality" implies smaller and more
expensive. The problem wasn't the growth of the specialty
retailers, it was the need for manuracturer's to grow. The
speciality chains simply could not sustain the necessary growth the
manufacturers required to meet their own financial plans and as
large national chains grew, they were left no choice but to expand
into big box. Once that happened, and consumers could shop the
brands more effectively, then the speciality retailers were
instantly 3 to 5 points of margin disadvantaged, often more. There
was simply no way for them to meet the scale and efficiencies of
supply chain, warehousing and other logistics costs of running
their businesses either, relative to the big box retailers. The
specialty businesses had neither the resources to build the
logistics infrastructre, nor the in-house expertise required for
such things. More costly in the front end of the store and more
costly in the back end of the store, the business model is what
killed them. It's just basic business economics. Long-term growth
and profitability are not for those who want to stand in the
middle. That is where speciality retailers ended up. Too small to
gain the real efficiencies of the big box chains and too big to
keep costs low enough to survive. This has happened to almost every
other form of retailing, by the way. It's not unique to consumer
electronics. Just look around at the retail landscape. How many
mid-sized retailers are left in any retail channel or industry?
Only a precious few. It's just not a sustainable financial model
and that is the brutal reality of the free market economics.
Nothing more.
November 14, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingHarry Rajt commented:
Ditto the remarks of Mitch Tatlock. He hit the nail square on the
head!
November 14, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingHarry Rajt commented:
November 12, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingSteve Firszt commented:
Two points that I believe loom large in this picture... 1. Most
specialty stores I have visited the past four years have offered a
less-than-stellar experience. If the stores themselves
weren’t suffering from the 4 D’s (dank, drab, dusty,
& dog-eared), the people were. Compare this to the generally
perky and remarkably high-touch experience found at Best Buy. In
this sense, I believe specialty retailers are getting beaten at
their own game. 2. The battle for customer loyalty is more intense
than it ever has been. It is no longer enough to “do a good
job”. People are busy, their lives filled with too much to
do. They forget who was good to them last year. I think it no
coincidence that the retailer with the most aggressive loyalty
marketing program is also the #1 retailer in our industry. I
don’t consider this an advertising issue, where specialists
can’t compete. This is a “take care of your herd”
issue, at which specialists should reign supreme. But most
don’t.
November 12, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingSteve Firszt commented:
November 12, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingRob Robinson commented:
For any of you biz school graduate students reading this, there's a
really interesting Masters' thesis or PhD dissertation subject
here: "The Demise of Specialty Retailing in the Consumer
Electronics Market". Interviews are probably still possible with
key players who were involved in the founding and/or growth of
regional specialty chain retailers such as Tech HiFi, Pacific
Stereo, United Audio, Lafayette Radio, Playback, Musicraft, Team
Electronics, Rabson's, Rogersound Labs, Crazy Eddie, University,
The Federated Group, Cal Stereo, etc. as well as the regional
chains absorbed by Tweeter (Sound Advice, Bryn Mawr, HiFi Buys,
Dow, Home Entertainment, Showcase, etc.). It would be an
interesting study as many of these retailers succumbed long before
the onslaught of big box merchants and the Internet. Many, if not
all, were the victims of their own success in that they outgrew the
ability to successfully manage their larger companies. All were
founded by highly creative individuals who were unable to either
maintain the same level of personal involvement that made them
initially successful or develop upper and middle management who
could be effective surrogates.
November 12, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingRob Robinson commented:
November 11, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingMitch Tatlock commented:
November 11, 2008
In response to:
What Tweeter May Be Saying About Specialty A/V RetailingMitch Tatlock commented:
Vendors also contributed to the demise of A/V specialists-by
allowing once exclusive brands(ie Yamaha) to big box stores. To the
eye of the consumer everything became a commidity-so why not go
with the cheapest price. The only way Specialty A/V retailing can
continue is to stay away from bottom and middle tier products.
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