Mac Slocum
04-20-07, 08:55 AM
Commentary: A/V Retailers Race to the Bottom
Big-box A/V retailers are cutting staff and closing stores. Columnist John Caldwell isn't surprised.
At the end of last month, Circuit City issued a press release stating that they were firing 3,400 people and closing a number of store locations. The official release described the 3,400 as “associates who were paid well above the market-based salary range for their role.” It seems reasonable to draw a connection between “paid well” and “top performer.”
The Circuit City announcement came on the heels of a similarly gloomy announcement from Tweeter, which in March closed a third of its stores and initiated massive layoffs. This news followed earlier closinings of Good Guys and Ultimate Electronics.
http://www.electronichouse.com/images/uploads/0407-circuit-city.jpg (http://www.electronichouse.com/article/commentary_a_v_retailers_race_to_the_bottom/C155)
Why all the gloomy news at these traditional brick and mortar big box consumer electronic companies?
Each failed to do many things right. The particulars of each company’s situation fills volumes in our industry’s trade magazines and Web sites. But common to all of them is the following:
1. They all got caught in the middle. They were lulled into largely selling mid-brand mid-fi stuff at too low of margins to a market that had the same stuff available to them on the Internet.
2. Besides getting out-flanked in the middle selling mostly low margin flat panel TVs, in their race to compete in the replacement of every TV in North America, these doomed companies failed to adapt an attachment-selling strategy that sold a better class of audio products and systems to go with all those shiny new flat panels. HDTV is also multi-channel audio. There have been numerous studies of late that have shown that much of America doesn’t have their new HDTVs hooked up correctly. That includes the audio half of HDTV.
To read more of John’s commentary, go to
http://www.electronichouse.com/article/commentary_a_v_retailers_race_to_the_bottom/C155/
Big-box A/V retailers are cutting staff and closing stores. Columnist John Caldwell isn't surprised.
At the end of last month, Circuit City issued a press release stating that they were firing 3,400 people and closing a number of store locations. The official release described the 3,400 as “associates who were paid well above the market-based salary range for their role.” It seems reasonable to draw a connection between “paid well” and “top performer.”
The Circuit City announcement came on the heels of a similarly gloomy announcement from Tweeter, which in March closed a third of its stores and initiated massive layoffs. This news followed earlier closinings of Good Guys and Ultimate Electronics.
http://www.electronichouse.com/images/uploads/0407-circuit-city.jpg (http://www.electronichouse.com/article/commentary_a_v_retailers_race_to_the_bottom/C155)
Why all the gloomy news at these traditional brick and mortar big box consumer electronic companies?
Each failed to do many things right. The particulars of each company’s situation fills volumes in our industry’s trade magazines and Web sites. But common to all of them is the following:
1. They all got caught in the middle. They were lulled into largely selling mid-brand mid-fi stuff at too low of margins to a market that had the same stuff available to them on the Internet.
2. Besides getting out-flanked in the middle selling mostly low margin flat panel TVs, in their race to compete in the replacement of every TV in North America, these doomed companies failed to adapt an attachment-selling strategy that sold a better class of audio products and systems to go with all those shiny new flat panels. HDTV is also multi-channel audio. There have been numerous studies of late that have shown that much of America doesn’t have their new HDTVs hooked up correctly. That includes the audio half of HDTV.
To read more of John’s commentary, go to
http://www.electronichouse.com/article/commentary_a_v_retailers_race_to_the_bottom/C155/