Retail reaction to Sony’s new e-commerce initiative is ranging from unease to nonchalance.
While some dealers are queasy about competing with a key supplier on price and allocation, and fear it could open the direct-sell floodgates, others question the impact of any single-brand cyberstore regardless of pedigree.
In the end, SonyStyle.com has raised more questions for retailers than provided answers. But given its arrival, and Sony’s market clout, most are reserving judgement – at least in public – until the company’s latest retail ploy plays out.
“We’re going to take a wait-and-see approach,” said Steve Eastman, divisional merchandise manager for electronics at Target Stores. “We’re aware of Sony’s strategy, but we think that long term a click & mortar approach has more legs.”
Steve Wood, merchandising VP for Ultimate Electronics, conceded that “whenever one of our suppliers decides to sell direct to our customers, there’s a concern.” But the company preferred to save those concerns for private discussions with its supplier.
Wood added that Sony was “very up front and above board” in notifying Ultimate of its plans, which it did through a private meeting with Tony Piazza, president of Sony Electronics Retail Sales, several months back.
According to Bill Trawick, executive director of the NATM buying group, life will go on for his member dealers, just as it did after Sony opened its showcase stores. “Certainly, we as retailers don’t need any manufacturer selling directly to consumers,” he said. “But Sony has always been in the retail business in some way. We can’t change this one, and have to learn to live with it.”
At Ken Cranes Home Entertainment, corporate director Tom Campbell was uncharacteristically reserved. “For once I have no answers, only questions,” he said. Chief among them: Why Sony deems it necessary to add additional distribution when demand for certain products, notably Wega, far exceeds supply. “What is the purpose of this? To garner more market share?” he asked. “I’m sure there will be many more questions. I hope Sony has the right answers.”
Warren Mann, executive director of the MARTA buying cooperative, doesn’t believe SonyStyle.com will be a significant factor in the marketplace. “If they take out more than 1 to 2 percent of volume I’d be surprised. They’re not going to pick up bunches and bunches of business, except in Fargo, N.D., where there’s no authorized dealer.”
What does surprise Mann is that Sony would risk upsetting its dealer cart over so small a prize. “The emotional impact makes it a no-gainer,” he said. “The loss can be significant among irate dealers who have the option of emphasizing other suppliers.”
Tellingly, a number of ordinarily candid companies declined to comment on SonyStyle.com, including Best Buy, Good Guys, J&R Computer World and Tweeter. But other authorized dealers appeared downright blasé about the move.
“It’s not going to affect our business whatsoever,” a Kmart spokesman told TWICE. “It’s like NikeTown; the initial [retail] reaction was similar, but people still go to malls to buy their shoes.”
While Circuit City declined to comment on “our vendors and their retail efforts,” a spokesman noted, “We’ve always had a strong vendor relationship with Sony and anticipate that will continue in the future.”
Perhaps the most receptive dealers were those with businesses based solely or significantly on e-commerce, given their greater appreciation for the challenges of cyber sales. “It’s wholly appropriate,” said Frank Sadowski, senior VP of 800.COM. “There will always be a consumer segment that prefers to buy directly from the vendor, but we think that segment is very small. Most would prefer a wide variety of brands for comparison, but that’s what the Internet is all about – choice. We certainly don’t fear that all of our customers will buy from RCA or Sony.”
Robert Heiblim, CEO of etown.com, regarded Sony’s action as “their right and responsibility to look at a new viable channel. I’m not saying it’s the right thing to do, but it’s a way of getting some unique products out that some retailers choose not to carry, and it’s a response to having their products switched off to other brands in stores.
“If all it does is steal sales from retailers, it’s a dumb move, and retailers have the right to redirect their brand relationships,” he said. “But Sony has also done a lot of good for the industry. It’s a pull brand, and we should hear them out. Ron Popeil and QVC are selling a lot more stuff for other people than they are for themselves. If Sony tells a good story, and it leads to improved demand, then a mutual goal has been met. If not, it will collapse of its own weight.”
Added Dan Hodgson, senior VP/merchandising at Crutchfield, “At some level Sony is encroaching on our territory, but it’s not something I’m losing sleep over. Retail is a very different business from what they are. Could they succeed at it? Sure, but they’re starting from scratch, and we’ve been doing it for 26 years.”