Electronics Stores Fight for Survival

http://online.wsj.com/article/SB10000872396390444772804577621581739401906.html?mod=WSJ_article_comments#articleTabs%3Dcomments

by taytus • 14 years ago

13 22 14 years ago

online.wsj.com

Sharma• 14 years ago

I think its otherwise now. I will mention just one example and same thing will apply to many. I always preferred to buy from amazon(picking just one name) because of no tax and so always better than those stores.But now Amazon is charging sales tax in many states and plan is to charge in more and more states.That will be followed by other online stores and then it will always be more convenient to go to local store(because price is same) feel the item and return it hassle free if you don't like it!

sliverstorm• 14 years ago

because price is same

Ah, if only. I swear, sometimes it seems like Amazon knocks 10% off MSRP, while Radio Shack adds 10%. And I'm talking sticker, not sales tax.

dukehoops• 14 years ago

Although I cannot find the URL, I recall reading somewhere that, on average, Amazon prices were 9% lower than big boxes' (BBY, et al). not clear whether that was 'bottom line' price comparison (in which case AZN's prices would not include tax whereas brick & mortars' would. Now that AZN agreed to collect sales taxes for a number of states that delta will shrink.

But, I do believe that convenience of easy ordering (for lazy ppl like me), is bigger differentiator than a couple of percentage points on pricing.

jlarocco• 14 years ago

In the United States that isn't technically true. Most states require people to pay a "use tax" [1] on the stuff they buy from Amazon.

   [1] https://en.wikipedia.org/wiki/Use_tax

maxerickson• 14 years ago

The structure of the use tax in my state sort of encourages online purchasing. For purchases less than $1,000, there is an option to pay an income based lump sum (rather than itemizing the purchases and paying a calculated tax). Someone who doesn't care to keep track of the individual purchases saves a bit of tax by making sure they make sufficient purchases (for an AGI of $100,000, the savings kick in at ~$100 a month).

rorrr2• 14 years ago

Amazon will always be cheaper than a retail store, because it doesn't need to pay for

1) Store building rent (they ship directly from their warehouses)

2) Cashiers / sales salaries

3) Store security, cameras, loss prevention.

4) Store utilities and other - electricity, water, insurance, heating, cooling, inspections.

5) Liability (such as customers falling or pretending to fall)

6) Inventory tracking, moving things around shelves, optimizing, etc.

cshesse2• 14 years ago

Amazon does currently have to pay for the somewhat expensive delivery of single items to your house or place of work, so it's not all good.

Also the convenience that the parent talks about is not what I'd call convenient. Basically the last 4 times I went to a store, they didn't have the thing I wanted, or it was out of stock. And most of the time I want to go to a store, it's not open.

squonk• 14 years ago

Retail is not going away. It is evolving.

Big box stores killed the mom & pops. Online retailers killed the big box stores: Circuit City, Barnes & Noble, Borders, Blockbuster, Tower Records.

WalMart is right to be concerned.

Consumers benefit from online shopping: - Skip the ride to the store and back - Seemingly limitless selection in a few searches - Confidence in pricing by comparing

Brick & mortars need to do their homework and understand the psychology of shopping in an Internet world.

There will always be those who: - Want it right now - Enjoy the social interaction of shopping with friends - Want to talk to someone who knows what they are talking about - Want to be 'seen'

They need to wind down and market to that segment of the population. That is where they are headed anyway.

drstewart• 14 years ago

>Big box stores killed the mom & pops.

I think the internet will kill big box stores and bring back mom & pops. There's no point in going to Best Buy/Walmart/etc. to buy something I can get on Amazon for a fraction of the price, but I will browse local stores for unique and interesting goods that are harder to find online if you're not looking for them.

It will bring back browsing as a legitimate activity, something which big box stores completely killed imo.

cshesse2• 14 years ago

Physical stores may be able to offer expertise as well as seeing and trying out things in person. I imagine they might not even stock multiple copies of a single product to save space, and you just order the product to be delivered.

SlipperySlope• 14 years ago

Given current trends and the aggressiveness of online retailers, its clear to me that increasing value percentages of the goods that we buy will be delivered to our door and not from physical stores.

So infrequently purchased items will be relatively harder to find at physical stores, and need-it-now items will be priced at a high markup in order to pay the rent and labor costs born by physical stores.

Another trend affecting all retail is the recycling of used goods via craigslist, eBay, and so forth. When such an item is purchased used, then its very possible that a retail purchase was lost.

Many people do not need to go to a physical store to learn about desirable goods, rather they observe what their friends have, maybe try it out, then buy online - with no physical store comparison or impulse shopping.

lutusp• 14 years ago

A quote: "RadioShack, whose stock is down 75% this year, is playing down cables and connectors and refashioning itself as a convenience store for smartphone buyers."

So sad. I can remember when Radio Shack was ... I don't know how else to say this ... a literal radio shack. I was a pre-teenage ham radio operator, and Radio Shack had pretty much everything I needed to build the radio equipment I needed for my ham station.

This was back when people built their own electronic equipment. Yes, I know that's hard to believe in the context of modern times, but when people wanted a radio transmitter or receiver, they would build one.

My first designs were based on vacuum tubes because ... again, I don't know how else to say this ... transistors were just a laboratory curiosity. Later, when Radio Shack started carrying transistors instead of tubes, I began designing transistor circuits.

An early Radio Shack store was a small warehouse of electronic parts, and almost no finished products. Now it's struggling to compete with all the other me-too finished-goods outlets. Even though the name "Radio Shack" sounds like a clever marketing slogan for modern times, originally it was a simple statement of fact -- they were a radio shack. And the employees actually knew something about electronics.

Later I designed electronics for the NASA Space Shuttle, so Radio Shack was part of my unorthodox education. I'll be sorry to seem them go.

atpaino• 14 years ago

The only way I can really see a big-box chain like Best Buy surviving alongside Amazon and the other online retailers is if they were to focus heavily on training their employees to be knowledgeable on all the products they are selling, similar to Apple's "Geniuses". I think the original problem stores like Best Buy were created to solve no longer exists - namely, a _physical_ one-stop shop for all your electronic needs. Amazon is clearly better for this.

Where I see opportunity for Best Buy to differentiate is in customer experience. When the typical consumer decides they want to buy a new laptop, and don't want a mac, they basically have a couple of options. They can either research laptops on their own (through Amazon, Engadget, et al) or they can just drive to a Best Buy store and buy whatever the employee tells them. The thing is, the Best Buy option really isn't much better currently because their average employee isn't very knowledgeable on the laptops they carry.

For this to work, Best Buy would have to both pay employees more and spend more time/money training them. Not to mention the costs associated with re-branding the company as a whole. However, IMHO I think something this drastic needs to be done for them to survive.

suresk• 14 years ago

One potential problem with that approach - a lot of people would utilize more knowledgeable salespeople like they currently utilize brick and mortar stores: Do the research there, then buy online to save money. This is fine for Apple, since most of the products they are educating people on are their own.

agumonkey• 14 years ago

Yes, this is a common reflex (guilty of this myself). It's hard to build a loyal customer crowd. Maybe with copious rebates for regulars.

ippisl• 14 years ago

Assuming the internet can't give a better customer support in the long term(at least from the knowledge side) is a wrong assumption.

Somebody can surely design an high quality expert system for consumer electronics , that asks you some questions and helps you choose good products.

Zarathust• 14 years ago

I would pay for quality counselling in store. What I get instead is highly pressured, commission driven employees who have low level knowledge of their products.

I must admit that I could buy it for cheaper online anyway, but there is currently a negative incentive to go to those shops

logn• 14 years ago

I've found that electronics stores which employ really smart people have no problem finding business (e.g., Fry's, MicroCenter). A lot of people need computer guidance from smart store employees. Even as a tech savvy developer, I am confused by hardware a lot. Like, what hard drive will fit in my Mac Mini?

lotsofpulp2• 14 years ago

Your example problem is solved cheaper, faster, and more reliably by searching online.

https://www.google.com/search?q=what+hard+drive+will+fit+in+...

Electronics Stores Fight for Survival

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