Last week a customer asked me how it’s possible that two major electronics retailers can open and close within a couple years of each other. What caused a major electronics store to open and close within one year? The question intrigued me enough to make it this week’s article.
At first thought this should probably be asked and answered in another article: probably one about business or finance. Right? Unfortunately for a lot of failed businesses that’s not always the answer. Electronics retailers are one of those categories most negatively impacted by competing technology.
Business analysts would answer Ultimate Electronics failure in one of a couple ways. Most likely is they expanded too aggressively and their infrastructure couldn’t handle the rapid growth. Other than that, business people might argue that following in the footsteps of Circuit City, as they did in most stores in 2010, made consumers view them poorly.
Technology most likely played a major role in abolishing their business. Ten years ago most people would have never thought of purchasing a TV online and having it mailed. But now, what would stop us from doing that? It’s a funny thing to say with TV screen sizes getting larger, but it’s easier to order products online now than it ever was.
Consumers are wising up to the idea that a TV is a TV is a TV. As long as the item meets the technological specifications most brands have become homogenous. Brands like Zenith, SONY, JVC, and Panasonic are no longer the only brands to pick from. Now we have brands from all over the world that have encroached our marketplace via the internet.
Some items can’t be easily purchased online. Clothing, for example, is one of those items that people like to hold and try on before making a purchase. People like to see the color, make decisions about size and see how clothes fit before slapping down their credit card. When was the last time you bought a pair of Levi’s online?
Circuit City was purchased by a company called Tiger Direct. Tiger Direct is a huge online consortium of online retailers that buys up out-of-business electronics brick and mortar retailers and gives them the look and feel of the original store; but online. Another major store they recently purchased is CompUSA. If you remember the old Circuit City you should compare it to the new online version.
Internet sales companies have the ability to homogenize shopping familiarity while taking away the retail shopping experience. There is no longer a need to physically see an item to make a choice. TV’s – the example I’ve been using – are the same as long as the specifications line up. I know that I can save a few bucks by buying the same TV online.
How does a company like Best Buy stay in business for so long? Well, Best Buy adapts themselves to online shopping. Though their prices are no better than competitive online retailers, they make it easy for tech savvy customers to look at their products and make informed decisions. Within the past six months they’ve added bar codes to their tickets which make it easy for shoppers to look up the specifications of the equipment on smart phones and portable devices.
Service companies like mine are faced with online competition every day. I no longer hear about the computer store down the street; I hear about online companies. Many people who have their computer serviced by me do so because they want to see where their equipment is being serviced and prefer to talk to local people. Some things like good old face-to-face service can’t be duplicated online.
(Jeromy Patriquin is the President of Laptop & Computer Repair, Inc. located at 509 Main St. in Gardner. You can text him at (978) 413-2840 or call him directly at (978) 919-8059.)