Paul Rutenis, senior VP/chief merchandising officer, RadioShack: One of the things that we are looking at as an audio play is that 80 percent of America probably doesn’t know what Bluetooth is. Our kids that are 18 and under probably know more about Bluetooth than the 24- to 50-year-old individual.
Over the holidays I was with my brothers, and they are in their 50s. They were trying to figure out how to work Bluetooth, and they had never done it before. I was really astonished. They had their smartphones and their equipment, but they couldn’t connect. They didn’t understand it. We are at the cusp of that, and it’s not only on the audio side. It is the whole wireless side, how you connect your device, and how that connection plays in the marketplace going forward.
Rick Souder, merchandising executive VP, Crutchfield: There is a common thread that goes through the categories. If you can turn people on to some of the things that they just don’t know you can do, there is a natural inclination to be willing to spend money in those areas. We really have to give them a reason.
I was talking to one of the major audio suppliers, who said he was at his neighborhood’s annual cul-desac party when he took out a small Bluetooth speaker, and everyone was like, “That is really cool. What is that?” He was kind of surprised and it opened his eyes. These were people who had the money to spend on it, and he said several of them ran out the next week and bought one.
I really think that just opening people’s eyes to things like that is where the successes will come. Hey, this is cool stuff, and a lot of people will be willing to spend the money. Call it discovery, call it marketing, whatever it might be. That gives me a lot of optimism going forward.
Fred Towns, president, New Age Electronics/ Jack of All Games: Great example: You’ve got a $35 device, Chromecast, that’s an unbelievable gift item and is not even scratching the surface of what it could do. It has a few robust applications now but more are on the way.
I had the same experience as Paul and Rick. We had some guests over, and we had Chromecast hooked up. My daughter was controlling it from her smartphone and putting stuff up on the TV. Our guests were like, “How are you doing that?” It was an amazing opening. Then “How does it connect? How does it get its power? What plug do you need to have on your TV?”
All of those things were coming up. Wow, there is so much there for the picking, as long as we can educate the consumer about the next steps. For us that is a big focus point for driving that type of product.
Rob Eby, purchasing VP, D&H Distributing: We all have to remember that the smartphone has really become the digital repository for your life. If you look at the younger generation right now, my kids in particular, all of their pictures are on it. They don’t have pictures anywhere else. All of their music is on it.
You can look at companies like Fitbit right now where you can actually track your fitness and your sleep. There is so much information that is coming and going from this type of device that we all need to figure out how to merchandize it within our stores along with the products that tie into it. It will be a huge business. It won’t just be audio; there will be a lot of other products that will tie into the phone vehicle as well.
Stephen Baker, industry analysis VP, The NPD Group: Yes, the reason why all of these other things are selling is that people keep more and more things on their phone, and they are starting to want to be able to use it against other services: against headphones, against streaming speakers, Pandora, Amazon’s Cloud Player or other ways they can take advantage of all of those things.
It’s going to take time, education and some type of interaction with the phone market. The challenge that we all have is that for the most part getting somebody started on it isn’t the province of most in retail, except for perhaps Paul. That starts at the carrier level, and everyone outside of that channel struggles to really get the customer started on this.
How do you get the service level for the customer who wants to use all of these things that start somewhere with the phone? How do you get your music on there? How do you stream it around along with video?
The next challenge for everyone is to find out what people are doing with these things and then figure out what the right things are to connect against it. The challenge is the CE business doesn’t see a lot of that first activity because so much of it happens through the category. That is a challenge. I don’t know that we’ll ever figure it out, but I think that is one of the weaknesses of the strategy, which is that at some point you maybe lose that customer because AT&T and Verizon have nice stores that sell headphones.
Towns: Go into Mall of America and check out what is happening there with Verizon’s new store concept. You start to say, “Wow, there is a different play here at retail because they are now taking on almost a smart-home mentality. Here are all the things that you can do with your smart devices.”
It’s kind of a showcase for the connectivity environment, and I understand that at the end their goal is to drive the usage of data. Let me sell as many devices as I can in my store that will consume data, but on the other side of it they are giving this experience to the consumer in a whole different way from the carrier perspective. That is kind of eye opening.
Baker: More and more the business challenge is leading with the services. It is great doing a search and being able to find user reviews and YouTube videos to help the customer understand the products they have, but I don’t think we can sell all of this other stuff until we make sure they understand it and make it easier. We have to understand the value proposition.
Sonos is a great example. If you go back five years, as good as Sonos was, it was still horribly confusing and intimidating. Over the years it has gotten better and better, easier and easier, and people sort of understand it. It is still, however, a very difficult concept to understand and explain to people. The user reviews and YouTube really do help. But how do we bring all of that stuff together to be able to lead with service and lead with education? That is really important.
Dave Workman, president/CEO, ProSource: I hear dealers talk all the time about the threat of Digital Life, the home-automation concepts that AT&T is bringing to market. Even in the case of Sonos, with Bose’s entrance, I believe Bose will build a way bigger tent over that category than Sonos could have ever possibly hoped for.
As you think about categories like home automation, which has been growing by leaps and bounds through our channel, sometimes there is a mentality of, “I just want to keep it this little tiny business where nobody pays any attention to it.” That is not a reality in the CE business. There is value in having broad awareness of the technology that AT&T, Best Buy or any of the large platform players can bring to the market. Then the market will obviously have an amount of stratification associated with the varying levels of quality in product.
In general, increased awareness around these complicated technologies is a good thing for us, and we shouldn’t necessarily fear it but figure out how to manage our own business with the kind of product differentiation that we need to put in front of the consumer. In many of these categories we are dealing with miniscule consumer awareness insofar as how these technologies work. Rather than fear that, you have to figure out how to differentiate and embrace the increased awareness. You have to make your own business work based on your product and service differentiation.
