Can’t Anyone Do Tech Retailing Right?
By Harry McCracken | Friday, February 20, 2009 at 1:12 am
These are strange times for the retailing of computers and other technology products. Some of the most venerable and best-known names in the business are going out of business, or severely contracting: Sixty-year-old Circuit City is much of the way through the liquidation sale that will end with the closure of all its U.S. stores, a year after CompUSA nearly died before being acquired by TigerDirect and retreating to the U.S. southeast. That leaves Best Buy as the sole nationwide, full-service retail outfit focused on the selling of a wide variety of consumer electronics products. (I’m counting RadioShack as being something less than a full-service retailer, given the limited floor space of its outlets and its emphasis on accessories, cables, and other odds n’ ends.)
And yet Microsoft has just announced plans to open its own stores and help other sellers promote Microsoft products, presumably inspired in part by the phenomenal, unexpected success of the Apple Stores. You gotta think, however, that the company isn’t diving into technology retailing because the market is booming so much as because it’s so anemic. My guess is that Microsoft figures that the computer merchants of America are doing a mediocre job of explaining its products, and that it must therefore step in and try to get it right. Just like Apple did when it decided to play storekeeper a few years ago.
On some level, it would have been more startling if CompUSA and Circuit City had thrived than if they’d fallen on hard times. The history of consumer-electronics retailing in America is pock-marked with once-famous names that were forced to call it quits. And even though the currently dismal state of the economy may have dealt Circuit City may have dealt Circuit City its death blow, I can’t help but come back to one depressing thought: Circuit City collapsed because it didn’t do enough to earn the loyalty of busy, intelligent shoppers. And neither did the majority of electronics retailers that have ever existed. Their failure to do so inevitably led to their failure, period.
It’s tempting to point to the Apple Stores and blithely say that all the answers to building better computer retailers are contained within their four walls. Some of them are. But it’s not that simple. Apple Stores concentrate on selling Apple’s own limited selection of products, which makes it far easier to competently display, explain, and fix them. It’s hard to replicate that approach when you sell thousands of wares from hundreds of companies. And Apple deals mainly in high-end products that presumably leave a comfortable enough profit margin to invest in a superior retail environment. That’s far easier to do when the typical laptop you stock costs $1599, not $599.
Even so, I think it would be possible to build a chain of full-service tech superstores that served their customers better than any have to date–and which, as a result, stood a better chance of being viable businesses for years to come. Here’s what would make me a raving fan and a frequent buyer, anyhow:
Better stuff. It’s a vicious circle: Tech stores emphasize cheapo, bargain-basement products which won’t draw more sophisticated, affluent shoppers, and therefore have trouble squeezing out the profit they need to stay in business. (If you want something as mundane as a netbook with a six-cell battery rather than a chintzier three-cell one, you’ll probably end up hitting the Web rather than the mall when you buy.)
Newer stuff. Why is it that so many of the computers stocked at retail feel like flashbacks to what online merchants were selling six months ago? Why do digital-camera sections often sport some of last season’s models rather than the newer, better, cheaper ones that replaced them? There’s got to be a way to rush the latest products onto shelves far more efficiently.
Better-displayed stuff. Cruise the aisles of most technology retailers, and you’ll be confronted with laptops with keys pried off, TVs that are shut off so you can’t judge their picture quality, and printers set up to produce output samples–except they’re out of ink and/or paper. In theory, brick-and-more retailers have a huge advantage over Web-only outfits in their ability to let you see and touch products before you buy. In reality, most of them fumble this opportunity big time.
Better-explained stuff. I’m not even talking about salespeople who know what they’re talking about. I just want the right specs and prices displayed with the right products, so I know what I’m getting and how much it’ll cost.
More accessible stuff. I understand that retailers have to contend with the sleazeballs who shoplift their products. But when stores shackle up their laptops, you can’t lift them and judge their weight. When they put anything pricier than a 2GB thumb drive in a locked case, you might give up and walk out of the store if you can’t find a clerk with a key quickly. And when a merchant places a guard at the door to check my receipt (or pretend to), the message is clear: We Treat All Our Customers as Potential Thieves.
Better-priced stuff. I know that it’s impossible to provide both the best shopping experience and the lowest prices. Which is fine–actually, I’m happy to pay a bit more at a store which I know is working overtime to make me a happy customer. But why do manufacturer price cuts which online stores reflect instantly take so long to take effect at retail? It can result in a completely meaningless price penalty of $50 or $100 on a digital camera.
A little sense of fun. The vast majority of electronics merchants are remarkably dreary–even grim–establishments. Who wants to spend time or money in a joyless place that makes buying an expensive toy like going to the DMV? Where’s the Trader Joe’s of tech–a chain that seems to be run by people who enjoy what they do, and want you do enjoy yourself, too?
Okay, I’m done venting. Please tell me if you feel my pain–or if I’m asking for something that’s impossible to deliver. And if you have any other ideas for fixing tech retailing, I’d love to hear them and share them with other Technologizer readers.
[Note: This post was originally published in Technologizer’s T-Week newsletter, delivered to your inbox for free every Friday–head here to subscribe.]
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February 24th, 2009 at 5:45 pm[…] Can’t Anyone Do Tech Retailing Right? (technologizer.com) […]
February 20th, 2009 at 2:18 am
you just described apple stores
– Better stuff.
that means higher prices (and higher margins for the reseller). – Windows has been marketed to consumers mainly as the OS driving the el-cheapo laptops / desktops. – How can anyone sell computers with windows with this background in the scenario you desire.
– Newer stuff.
that´s the thing. – although the retailers don´t invest much money in displaying stuff, they still need quite some margin, and old stuff is one way to go
– Better-displayed stuff.
– More accessible stuff.
those two belong together. – It´s basically about the money, and to them it appears cheaper to lock down everything to prevent it from vandalism / theft. – It still looks crappy, though. – Somewhere comes the “broken window theory” into play (basically saying that if you dont repair broken windows / abandoned houses in a neighbourhood right away, the downward spiral of said neighbourhood accelerates; as ppl are less inclined to “behave”).
Therefore, I´d say that “casual” thieves, or careless persons, are less likely to rob/vandalize in an apple store, as it´s so well kept w/ upscale appearance and many sales persons on the floor. (therefore, actually, the applestore probably has significantly higher personnel costs, but less damaged / “lost” products costs – I´d love to see how these to add up in bestbuy vs apple)
– Better-priced stuff.
no. Apple sells at full retail price, and only when informed shoppers present a comparable written quote, they get a lower price. – And lots of ppl simply dont care enough (that´s the beauty of selling to the affluent 😉
– A little sense of fun.
typical services at apple stores
Personal Shopping
Workshops
Genius Bar
Youth Programs
and occasional concerts
—
I think it´s almost impossible to pull this off if you also plan to sell computers that run windows. Not selling computers makes it difficult to show off sync features of digital cameras, MP3 and the like.
Introducing a new OS (linux or unix based) could theoretically be pulled of by e.g. HP (which has most if not all of the typical accesories) and thencould start such a kind of stores with a similar user experience as Apple already has. – But I doubt that´ll ever happen
rgrds
matt
February 20th, 2009 at 5:24 am
The interesting thing is that there are several retailers doing it right in other areas. Trader Joe’s, for example, hits all the items on your wish list in food retailing. Maybe they should start selling laptops too.
February 20th, 2009 at 6:19 am
We needed to buy a new monitor when we were still living in W. Springfield and went to the local Circuit City. The sales person we finally found told us “Good luck with that!” I don’t think that we were in there again except for a pickup of something we’d gotten online.
February 20th, 2009 at 7:52 am
Basically it all comes down to margin. Retailers can’t make enough money to do all the great things you suggest.
“I’m happy to pay a bit more” = You are willing to pay a bit more than the lowest price you can find on the web which amounts to little or no profit margin.
People aren’t willing to pay for a higher quality retail shopping experience. Many folks have no problem doing their research in the retail store and then ordering online to get the best price.
Best Buy has been doing the best job in the sector and surprise, surprise, they are still around.
Apple’s products almost always sell at MSRP so the incentive to order online to get a cheaper price goes away – they are supporting retail like many high end brands do (e.g. Bose,)
February 20th, 2009 at 8:09 am
Harry,
There are two kinds of people who run/control retail stores.
Merchandisers and Accountants.
All of the items you wrote about are the focus of a merchandising attitude.
Accountants focus on cost control and could care less about the products and services.
Guess who is in control?
,dave
February 20th, 2009 at 4:49 pm
John Tantillo has a marketing blog and typically does weekly winner/loser posts. Microsoft has been the ‘loser’ multiple times, but last week, with the announcement that Microsoft would be opening retail stores and that David Portner would be heading up the effort, he named Microsoft the winner… for at least realizing that they need to make some changes…
Your suggestions are good and should be fairly obvious to retailers…but implementation will be another story. And for Microsoft, almost everything will be a case I guess of cross-merchandising–building closer ties with certain PC manufacturers and highlighting the best PCs that use their products could be a good move. But it also makes the whole plan that much more complicated with that many more opportunities for things to go wrong (and more hoops to jump through, and more people to sign off on details of each plan…)
Tantillo also had a post a while back about how the electronics market had ignored women for a long time (esp. big retail stores like Best Buy) and had just recently started to make up for lost time. In both cases, it’s a question of actually paying attention to who your consumers are and what they want.
February 21st, 2009 at 5:02 pm
Much of the consumer electronics industry suffers from “destructive competition”. Prices are forced so low that few can survive.
I worked for years for a domestic consumer electronics company. In the 80’s I shopped for televisions in the Akihabra district of Tokyo. Television were $500 more in Tokyo than Chicago. We were forced to “compete” with an unrealistic price.
Some years later, I worked on the development of the first digital satellite system. The receivers originally cost about $600 and are now about $50. No money is made at these prices.
Circuit City is just another part of the consumer electronics food chain. Many customers just want electronics cheap, cheap, cheap. They were complaining that the prices weren’t low enough at the liquidation sale. The current price structure does not support development and marketing of consumer electronics.
February 21st, 2009 at 5:05 pm
One further observation of the extreme competitiveness of consumer electronics. Remember when the computer companies (Gateway, Dell, HP) all started selling TVs? How many of them are still in the business now? This is just an indicator of how cutthroat the competition is in consumer electronics.