Mobile and connectivity seem to be moving
the industry away from a single-product focus.
Michael Vitelli, Best Buy:
People want their content wherever they want it and as simply as possible. It’s a big part of what Best Buy is trying to do, and it’s incumbent on all of us to show, as Dave has said, the art of the possible.
I’ll use my wife Jody as an example: When ATMs first came out she would rather barter a chicken than use a machine. Now she has her iPad so she can watch HBO Go wherever she is, and the other day she told me we need a Jambox. I looked at her and I said, “You know what that is?” If she’s doing that, we are on the cusp of the human race doing that. Therefore it is very incumbent upon us to make sure that we’re presenting that to folks in a meaningful way so they can see what that’s all about.
Dave Workman, PRO Group:
The one truth has always been that we live in a business where products will always become commodities at some point. Solutions generally don’t. You can groan about the profitability of television, but if you look at life cycles, margin for every product in this business at some point becomes pressured. Creating those value solutions for the consumer has generally been the long-term opportunity for profitability, outside of the early phase of introduction of technology.
What we’re talking about here is that ability to interconnect all of these devices, which may have very thin margins in and of themselves. Rather than say, “I can’t stay in this business because it’s 10 or 12 points,” retailers have to rethink what the margin yield is to the end solution, and how they can build a business model around that.
This is one of the areas that hold out a tremendous amount of hope for retailers who can really tune into it. We’re seeing a lot of changes in this business relative to expectations of margins on the products versus the operating margins that retailers need to stay in business. So rather than run from the devices, embrace them and figure out how to build a solution that you can make some money on.
Best Buy is doing that with its connected store format.
We want to be able to show people what they can do with their content on a variety of connected lines, and people respond to it. They want to see it, they want to experience it, and then they want to get it. But you’ve got to show it to them.
Jim Ristow, Home Entertainment Source (HES):
We actually beta-tested two Connected Source stores for the independent channel. One of the stores had three listening rooms. You don’t need three listening rooms anymore. So we transformed the 300-square-foot rooms into seven connected zones that the customer can walk through, see what’s available, and where they can touch it and feel it.
It went way better than we had anticipated, and we’re going to be rolling out 50 this year. It demonstrates to customers what 3D is, what these technologies are, what the Cloud really means, how they can use it, and how they can tie that connectivity not just to audio but to home control. And everything is completely turnkey.
We just finalized the last part of it here at CES, so we’re really excited about it. That whole model of experience centers — feeling, seeing, touching it — that’s the next exciting retail experience.
We’re still a little early in terms of getting the mass market emotionally connected to what this new ecosystem looks like in the home. They may know what a smart TV is, and they may know that they can drag content out of their computer, but they’re not emotionally aware of the concept of having everything you want to see or hear wherever.
That will be one of the great growth opportunities for this industry. We’re all continually asked what the next big product is. I’m not sure we have that next singular big product. We have a number of products that will drive greater consumer spending, but it will also be driven by content, experience and a whole bunch of other things, with some of the stuff that is evolving in our mixes today.
I tend to be an optimist about this business. Instead of looking for the next HDTV, we’re going to see evolution in the way all these things work together, and the market basket will grow with that.
The trick is demonstrating it.
There is still a huge amount of exposure that needs to come through brick-and-mortar, online, whatever venue. You have to have a lot of focus to get that user experience demo’d in retail. It’s very easy to leave that smart TV in the demo mode. You’ve got a bunch of icons on a set, but if you don’t bring that customer into what that set is capable of doing, they just don’t connect with it, not in the same way they would if they could really see that thing work.
How can online retailers convey the connected
experience on a screen?
Paul Ryder, Amazon.com:
We actually do it in a number of ways. The manufacturers explain the features, so there’s always that information available 24/7, and of course there’s the depth of the user reviews. Then there are the videos — Mike has done a ton of videos as well on his website. I don’t think anyone is going to watch a 10-minute video about all the features of a product, so what we’ve done is offer one-minute clips of each feature for a product. If a customer just wants to dial in on the connectivity, like how to get music to a college-era stereo, we’ve got a short video clip that really helps them understand it, and shows them which products to use. Video is actually very helpful, and it creates a more conversational website.
If they’re still kind of confused, we also have click to-call for some of these products. You can click a button, put in your phone number, and our call centers will help you better understand the features.
Fred Towns, New Age Electronics:
We’re addressing it by offering concierge services. It’s part of a bundled package when you’re buying a tech product. They have a toll-free number and can get through to one of our own call centers to learn how to use that product connected into that environment. It comes in as a value-add for us, obviously. We can work with the retailer to extend that if they want additional services in the future, or to carry that, say, for six months or a year.
The key is the ability to take the fear out, that if they can’t get it to work or connect up, what do they do? Now they have somebody to call to walk them through that set of services, especially for online customers or broadcast customers that bought it and are now unsure. It brings additional services, and it’s another way that you’re taking that retailer home with you.