It used to be a common joke in publishing: if your publication is floundering, launch a redesign. Then it wasn't funny anymore; publications either went online or shut down entirely. Is there a corollary in retail?
Best Buy has launched a redesign: the electronics retailer has reconfigured its outlets to look more like... Apple Stores. Best Buy is floundering: For its fiscal quarter ended in May, the company reported net earnings of $161 million, down from $255 million in the comparable year-ago period. Its CEO Brian Dunn resigned in April, but reportedly not for financial reasons.
The Apple Store concept is a proven success -- but it only sells Apple products. What does the Best Buy do-over mean for the other dozen-or-so direct Apple competitors it carries?
It might mean nothing. Consumer electronics companies should be used to partners becoming competitors. Samsung supplies to Apple through one business but competes with Apple in another. Google is competing with its ODMs by launching its own tablet, as is Microsoft. And that's only in tablets: Best Buy sells phones, software, music, video, gaming systems, white goods, GPS systems, TVs, printers, routers, and lots of other stuff, and it provides installation and repair services. If any of its other brands had storefronts with identities as unique as Apple's, it might be an issue. As it stands, there hasn't been any outcry from non-Apple vendors over the Best Buy Apple-like makeover.
There's a second reason why the storefront ultimately might not matter: it's called showrooming. Consumers interested in big-ticket electronics items go to a retailer to test-drive the products and then go online to buy them. Ironically, many of those purchases are made on Amazon.com -- which makes the Kindle tablet, which competes with every other tablet in the market.
Best Buy's makeover could also signal a sea change for retailing in general. Target is beginning to host boutique stores within its vast retail locations. The idea of a limited-brand, high-service store apparently resonates with consumers. Microsoft reportedly is also going to try branded storefronts. But if this is the model for success, Best Buy still isn't getting it right. Until Best Buy -- or any other retail outlet -- can provide a high-service boutique experience for all the brands it carries, it's just another struggling retailer. And a redesign isn't going to save it if shoppers continue to buy online.
Here's another wrinkle in the retail vs. online debate. It appears that Amazon.com has been able to undercut prices of items that are supposed to be priced consistently no matter where they are purchased. There are contracts for such things, so Amazon is getting in trouble with the vendors. Just one more insult to, say, Apple, when you use your Kindle to buy an Ipad and it costs less than at the Apple Store.
How can brick and mortar stores continue to sell? Well, the first thing is to have an online store. But mainly, provide a service that online you can't get. Like what? Help you decide which one is better (discount if you buy right there), maybe have a "try it yourself" system and borrow the devices for a few days.
The ability to negotiate, and also return your purchase for a refund or exchange, is pretty much exclusive to brick-and-mortar retail. Another way retailers can keep the storefront value proposition is to serve food (although that didn't help Borders much...)
I guess one other advantage on online store is that there is little or no room to bargain or negotiate especially when you are buying more than average consumer.
I also buy the idea of online stores having a kind of showroom where buyers can have the opportunity to test and also repair at the same time.
Bolaji, since online sales are happening through virtual store, maintenance and other related running costs are very minimal. So they can sell the products at a dam cheap price. From customer point of view, they are able to get the product at a discounted price, but for servicing and replacing the product which got damaged in transit are cumulative process.
"Consumers interested in big-ticket electronics items go to a retailer to test-drive the products and then go online to buy them. Ironically, many of those purchases are made on Amazon.com"
Barbara, exactly. Most of the time I had followed the same pattern. Test the device in retailer showroom and order it through online shopping site. Most of the online websites re offering up to 25% discounts for promoting more sales and to attract more customers.
@Flyingscot A client of mine thought the same way. It sold industry-specific equipment online for years at competitive prices. Last year it opened a showroom to allow customers to try out the equipment in person. Of course their customers from across the country would not likely pop into NJ just to check things out, but those in and around that area may well do so, particularly for the high tech stuff that is priced in the thousands.
I reckon for any items of $100 or more people will buy them on the net so for any company to do well it needs to have web prices. The company that can offer web prices and also boast a store front (so people can test drive) will win.
At the end, that's right. In addition, exactly right now, I was thinking if mini-tiny screen could launch a new segment of digital activity, in terms of webdesigner one hundred percent focused on tiny-web science...it seems exciting...
The challenges of a tiny screen for online purchasing are mitigated by the positive benefits of discounts (sellers can pass on retail savings cost to customers), wider choices and ease of access (you don't have to leave your house.) Both have advantages and disadvantages and customers will need to decide which is better.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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