Brick and mortar stores have to be Innovative to stay in business

[taters]

With the rise of online retailers and manufacturers selling direct the typical high end dealer can't sit on his ass and expect to make it anymore. One dealer in Southern California will bring goods to you and set them up so they will sound their best. This is not the same thing as borrowing a piece of gear for a few days. The dealer actually takes the time to give you the best sound possible. Of course you have to be a serious buyer but no other dealer offers this service as far as I know. He does have a 4000 square ft. store that he still operates but it's mostly walk in's. I haven't been to his store but I have a feeling he has knowledgeable people working there. I know it's a lot of work for this retailer but I'm sure it pays off for him. The bottom line is you have to be Innovative to stay in business in today's competitive market.

 

[cpp]

I friend of mine manages one of these national brick and mortar stores and as far as audio equipment keeping them in business, that's far from it. They make their money off of the big home items; small and major appliances, computers and TV's not home audio equipment. But they do home setup as well. And their innovation initiatives are usually made some management types in their headquarters. Most of the locally owned B&M store I know, already provide home setup on anything they sell.

 

[LL21]

The 3 dealers I have worked the longest with (and I am loyal)...have always gone the extra mile. And that has always included installation...but also picking up/shipping for repairs (and loaner equipment while I am under repair so I have music). It has even included equipment I did not buy from them!!! It includes email, advice, talking options thru...and oftentimes saying 'let me find out'. They bring it to the house, set it up, carry it back. There are 3 dealers with whom I have done 90% of my business over the last 20 years.

But I have reciprocated by paying them a fair commission on things I have bought from sellers directly 2nd hand which they took receipt of, and installed for me. It gave me peace of mind knowing if it broke, they would help me out with shipping/repairs, and i think they have also appreciated commissions when they did not sell it. Is this an innovative way to keep the local bricks and mortar store going? For me, it is because this takes advantage of one particular service that bricks and mortar business offer better than manufacturers or online. They are LOCAL...they are there, can come over to hear things, install things, pick things back up, get repairs done locally for less and without shipping, etc.

 

[audioguy]

The high end audio stores I am familiar with that are successful got out of the hardware business a long time ago. They sell hardware but the large majority of their income/profit comes from "system installation" and home automation installation AND maintenance.

The last audio store in our area of any size who was primarily in the hardware business, went toes up after 23 years -- about 5 years ago!

 

[jeremya]

For what it's worth, I started my business (Hi-Fi Foundations) last fall with a different vision in mind than the standard "brick & mortar" showroom model. Why?

Partially due to the reasons described above -- but more specifically because I've never heard audio equipment sound in MY room like it did in the show room. Different room acoustics, different power, and a different foundation (literally and figuratively) add up to different sound.

To that end, I don't really deal in hardware -- I deal in more foundational improvements (system setup, power & signal delivery, resonance control) that help my customer's systems perform their best and whenever possible, we do all of the demonstrations in the target listening room. It just doesn't make sense to do them anywhere else, IMHO.

The downside of this approach as a small business owner is that it's virtually impossible to demo a room full of speakers and amplifiers -- so I leave that to the big box stores and focus on making all those boxes sound right at home in your home.

 

[taters]

For what it's worth, I started my business (Hi-Fi Foundations) last fall with a different vision in mind than the standard "brick & mortar" showroom model. Why?

Partially due to the reasons described above -- but more specifically because I've never heard audio equipment sound in MY room like it did in the show room. Different room acoustics, different power, and a different foundation (literally and figuratively) add up to different sound.

To that end, I don't really deal in hardware -- I deal in more foundational improvements (system setup, power & signal delivery, resonance control) that help my customer's systems perform their best and whenever possible, we do all of the demonstrations in the target listening room. It just doesn't make sense to do them anywhere else, IMHO.

The downside of this approach as a small business owner is that it's virtually impossible to demo a room full of speakers and amplifiers -- so I leave that to the big box stores and focus on making all those boxes sound right at home in your home.

Is this a hobby or a business?

 

[audioguy]

Is this a hobby or a business?

There are no speakers listed on his website that I could locate or amplifiers or preamps or source components. First audio retailer (home based or otherwise) that I have seen that does not sell the core components of an audio system!

According to his web site he improves setup, power and resonance and other such tweaks. It also suggests he does acoustic treatment but he sells no acoustic treatment products. Great if you can earn a full time living doing just that!

 

[jeremya]

Thanks, audioguy!

Regarding room treatments, from what I've seen, the margins are so small for resellers as to not be worthwhile, so I focus on room measurement and assessment and will work with companies like GIK to fill the actual product need. (I don't list them directly on the site because I'm not actually a "dealer" for their products.) And if at some point I feel I can manufacture a better (or at least as-effective) product for my customers at a better value, I will consider doing so.

Taters -

It's a new. small business and we're still in the "start up" phase. The website (while pretty) is very much a work-in-progress content-wise.

The reality of being a new, small business isn't exactly glamorous. It certainly doesn't pay enough to support a family on its own which requires me to do other work in tandem until this "side-venture" gains enough momentum to be my "sole-venture". For now, I'm focused on making my small-but-growing customer base delighted and trusting that a consistent application of customer focus and passion will bear out in the long run.

I strongly identify with what you said in the OP -- the audio retail business has to change and I believe that the future is about putting customer service first. A lot of the B&Ms around here are clued into that, and most of them do a great job... But there are a lot of people out there who haven't touched their gear (other than to listen to it) in years. They may be hesitant or too busy to visit a showroom, but they wouldn't mind having a friendly, knowledgable person come over to help them get the most out of their system with targeted suggestions for better speaker placement, possibly some better wire, or a bass trap, etc. Also, in this economy, not everybody wants to dump boat loads of cash into new speakers, amps, etc., especially if it can be shown that what you have can sound so much better with the right foundation supporting it.

That's where Hi-Fi Foundations comes in, and -- as audioguy pointed out -- it's what makes us a little different.

 

[Garth]

bricks and mortar

With the rise of online retailers and manufacturers selling direct the typical high end dealer can't sit on his ass and expect to make it anymore. One dealer in Southern California will bring goods to you and set them up so they will sound their best. This is not the same thing as borrowing a piece of gear for a few days. The dealer actually takes the time to give you the best sound possible. Of course you have to be a serious buyer but no other dealer offers this service as far as I know. He does have a 4000 square ft. store that he still operates but it's mostly walk in's. I haven't been to his store but I have a feeling he has knowledgeable people working there. I know it's a lot of work for this retailer but I'm sure it pays off for him. The bottom line is you have to be Innovative to stay in business in today's competitive market.

1 The store needs to be a place you want to be apart of

2 The staff need to give you good info

3 They need to stock gear that fits your needs

4 Demo with music you know well

5 Price can you get the same level of music at a better price if not buy it

 

[garylkoh]

I think that the problem with the business model is one of perception.

American consumers don't pay for service as part of the "purchase agreement". At the restaurant, the bill comes, and then you add 15% to 20% of "gratuity". With the hifi purchase, if there is no service involved (speaker set-up, turntable set-up, room set-up, etc.) then it sticks in their craw if they have to pay the store the 40% mark-up that they know is there. They don't see the three, four visits they make as part of the service given to them before the purchase agreement is made.

I think that part of the service that is provided by a good store (but is not seen by the consumer as such) include:

1) Selection of product mix
2) System matching and assembly
3) Set-up and demonstration (including having the right condiments - ie. the music)
4) Ordering, shipping and handling from manufacturer/distributor
5) Delivery and set-up

Both sides of the fence are guilty. The stores for just picking the product of the month, whatever's on the cover of Stereophile and Absolute sound, and nothing else; setting up and assembling badly (if I can cook better at home, why would I visit a restaurant - same thing with an audio store); not having the right music to demo with; and not knowledgeable enough to conduct a good demo.

The consumer reads magazines (and now on-line forums) and think that they can assemble a better system themselves just picking components on the Stereophile Class A list - because that's what the stores do anyway. So, they don't think that the stores are doing them any service better than they can do themselves. So, they buy on-line, second hand, at a discount. No wonder the state of the industry is in such bad straits.

We can either decide that we want a change, or we can decide that we just want to continue doing the same thing, and soon there will be no where in the country to audition a high-end system anymore.

 

[taters]

I think that the problem with the business model is one of perception.

American consumers don't pay for service as part of the "purchase agreement". At the restaurant, the bill comes, and then you add 15% to 20% of "gratuity". With the hifi purchase, if there is no service involved (speaker set-up, turntable


set-up, room set-up, etc.) then it sticks in their craw if they have to pay the






store the 40% mark-up that they know is there. They don't see the three, four





visits they make as part of the service given to them before the purchase agreement is made.

I think that part of the service that is provided by a good store (but is not seen by the consumer as such) include:

1) Selection of product mix
2) System matching and assembly
3) Set-up and demonstration (including having the right condiments - ie. the music)
4) Ordering, shipping and handling from manufacturer/distributor
5) Delivery and set-up

Both sides of the fence are guilty. The stores for just picking the product of the month, whatever's on the cover of Stereophile and Absolute sound, and nothing else; setting up and assembling badly (if I can cook better at home, why would I visit a restaurant - same thing with an audio store); not having the right music to demo with; and not knowledgeable enough to conduct a good de

The consumer reads magazines (and now on-line forums) and think that they can assemble a better system themselves just picking components on the Stereophile Class A list - because that's what the stores do anyway. So, they don't think that the stores are doing them any service better than they can do themselves. So, they buy on-line, second hand, at a discount. No wonder the state of the industry is in such bad straits.

We can either decide that we want a change, or we can decide that we just want to continue doing the same thing, and soon there will be no where in the country to audition a high-end system anymore.

I agree with everything thing you have said. The problem is people have already voted with their wallets. In fact they have been doing this the past 20 years. The end of the high-end dealers and demos is near an ending. Soon it will be a relic of the past.

 

[jeremya]

...The consumer reads magazines (and now on-line forums) and think that they can assemble a better system themselves just picking components on the Stereophile Class A list - because that's what the stores do anyway. So, they don't think that the stores are doing them any service better than they can do themselves. So, they buy on-line, second hand, at a discount. No wonder the state of the industry is in such bad straits.

We can either decide that we want a change, or we can decide that we just want to continue doing the same thing, and soon there will be no where in the country to audition a high-end system anymore.

You're spot-on, Gary.

It's not an easy problem to tackle -- and the manufacturers play their part as well (as you well know ). They specify an MSRP that covers all the anticipated costs of business - including layers of distributors and the reseller's cut at the end (and the reseller always expects the biggest piece of the pie), and many of them demand that the reseller not offer discounts to the customer without prior approval -- or risk losing their access to that manufacturer's product.

But shouldn't the reseller (who has the biggest margin...) have the freedom to sacrifice some of that margin if the market is demanding a lower price? Some manufacturers say yes, others say no. It's very common in the hi-fi world for the manufacturer to say "no," without qualification or exception because they believe that the value of their product and their brand is upheld by its price in the market. After all, if a $10k widget barely sells at full price, but routinely sells when it is marked down to $8k, then it's really an $8k widget, isn't it?

I think if more resellers had the freedom to set their product prices as they see fit, we'd see prices come more in line with what the market sees as "fair" value for the product (which is similar to the Internet price...), and then resellers could become more transparent with their costs as well. For example, we could charge an "in-home setup / installation fee" on top of (instead of included within) the product price (some do this, others don't -- depends on the product tier), then that in and of itself would become a "product" in the local market worthy of referral (if we do a good job people will say, "Oh man, Hi-Fi Foundations did such a great job tuning my system, their $X in-home setup was totally worth it!")... similar to how a good guitar mechanic gets a reputation for setting up guitars well -- for a fee.

But to ask a customer to pay $10k for a widget, and then to demand an additional fee on top of it for in-home setup and configuration is just adding insult to injury -- especially when, as you say, they may feel they can do as-good-or-better. I'd rather the customer pay $9k (so they feel they are getting a good deal) for the widget and pay me an additional fee to deliver & spend time with them dialing it in to their environment.

 

[garylkoh]

Jeremy, you are right. The $10k widget should be a $8k widget, but if you then add $2k service on top, it comes back as a $10k widget. The problem for the manufacturer is that the retail store sells the product at $8k, and then doesn't provide the service and support to get the customer happy with the product. Ultimately, it becomes the manufacturer's problem.

It's like going to a restaurant, and the $80 meal is an $80 meal - but then you pay $16 for service. If you get lousy service, you can choose not to tip. In audio, paying $8k practically guarantees lousy service.