Thursday, September 12, 2013

Is There A Future For Electronic Goods Retailing? Some Of My Thoughts

I recently read an article about the good health of Best Buy's Stocks. Surprisingly, even though the competition with online retailer becomes tougher and tougher, Best Buy succeded in delivering promising results. The question that this article ask, and the same that I ask to @tbayart , was if brick and mortard electronic goods retailer still have a future. 

Indeed, in this specific field, the competition of the Internet is very important. Most of the traditional store chains are not able to compete with prices, and the showrooming hype makes it even worse. The margin rates are historically low, and the price competition with online retailers which don't have the real estate cost makes it even tougher!

Some people even believe that traditionnal retailers are condamned to shut down eventually. Actually, I do not really agree with this version.

I may look like a trailblazer, but I have envision what is going on right now almost ten years ago: the show rooming trend. But at this time, I did not picture it as a bad thing, but actually a great opportunity to improve customer relationship, and the added value of the retailer. Here is sort of what I saw:

  • Stores would have very low stocks as people would tend more to buy goods to be delivered home.
  • There would be no cash desks, people would buy with cards and have automatic cash desks, which would lower the cost of cashing in.
  • There would be fewer products, to simplify customers' choices, but they would be presented in a manner that customers would be able to test them.
Of course, my vision now would have changed a little bit. Because the world has evolved a lot (at this time I could not see how mobile devices would change the world, nor what the competition landscape would have been), and also because I gained experience and expertise about retailing and marketing.

But I still believe there is a lot of room for brick & mortar retailers. And the main reason is that those kind of products requires a long decision making process, a high implication due to the cost, and a great knowledge of the products due to their complexities.

So I still believe there is room to develop a profitable business modell, which would actually be based on the showrooming trend which most of experts blame.

  • Maybe there would be less stores, and further from downtown: Maybe like Ikea with a big surface, which would help to show out the products.
  • Maybe there would be no stocks, or actually like ikea, on the opposite, there would be no warehouses the stocks being in the store.
  • People would buy on their sell phone their products, which would lower the cash desk cost.
  • Maybe there would be lower inventory (I believe that the market becoming mature, the product ranges start to be cut, which is a good thing), which will lower the cost of inventory.
I may not have all the information needed to develop the whole concept, but trust me, there is room.