The biggest problem facing the AV industry and its customers today?

[Stuart Wright]

The biggest problem facing the AV industry and its customers today?

A potential customer walks into a high street AV retailer and takes a demo of some equipment they are interest in purchasing. The customer takes their time and maybe a cup of coffee and makes the decision to buy. Then they whip out a piece of paper with details of the same equipment for sale cheaper at www. whatever .com and tries to get the dealer to match the price. Or worse they just walk out of the shop and buy online.

Having spoken to lots of people in the AV industry, I have come to the conclusion that the big problem (perhaps the biggest) for the UK AV industry is the effect of internet sales.
Why? Because

• internet sales have risen dramatically and will continue to do so (see note 1 below).
• the cost of selling on the ‘net is considerably lower than from a high street shop and therefore online prices are lower (see note 2 below)
• high street retailers are losing business to online stores
• manufacturers’ pricing structures have not reflected the costs of making a sale. I.e. the cost of the kit to retailers is the same whether it is to be sold mail order or in a shop
• Some retailers are fighting back by refusing to stock certain manufacturers’ products unless the pricing structure is altered to create ‘a more even playing field’ (see note 3 below)

This chain of events has caused a bit of a ruckus in the industry. As consumers, we should try to appreciate what happens behind the scenes because it affects us. If all the high street retailers were to go bust because they lost all business to online retailers, we would have nowhere to audition our AV kit (see note 4 below). And the very best advice is to audition equipment before you buy it (see note 5 below). High street retailers can offer us a valuable service we simply can’t get from online stores (see note 6 below).

Many manufacturers are reacting to the situation by either

• preventing their products from being sold mail order using various methods to discourage the retailers (see note 7 below)
• restructuring their costs to retailers. Products are either more expensive if they are destined to be sold online, or they are cheaper if they are destined to be sold in a shop. Or a bit of both (see note 8 below)

In short, then, the perception that most of the UK AV manufacturers, distributors and retailers have is that the internet is bad for their business.

The solution?
UK AV manufacturers, distributors and retailers need to understand what the internet actually is. They need to appreciate that it is used by people – their customers – to find information in the same way as people buy AV magazines to find information.
They should use the internet to send their message to their customers.
A message something like ‘buy from our high street retailers/our shop because we can offer you a different/better service than you can possibly get mail order’.
Imagine a magazine advert which you only had to touch with your finger to get more information about the company/products. That’s what you get with internet advertising.

But the internet is relatively new and the concept of advertising on it is completely alien to some companies. I guess part of the problem is that the marketing people don’t know where they can advertise. In the UK there are only two significant online resources for home cinema – the Home Cinema Choice group of sites and the AV Forums.

Many AV manufacturers, distributors and retailers’ adverts are conspicuous by their absence on the AV Forums. Where are the adverts for Sony, Pioneer, Panasonic, Philips, Toshiba, Sharp, B&W, CEDIA, Sevenoaks, Audio Excellece, Audio-T, Practical Hi-Fi? Are these companies not interested in reaching the same target audience they get with What HiFi, Home Cinema Choice etc.?
What Hi-Fi’s ABC (number of issues sold) is 70-80 thousand per month; we have an ABC of over 150,000 every week!
It’s somewhat surprising that the AV Forums – the busiest home cinema community in Europe - is not getting support from these important companies.

In summary
My message to people buying AV kit is not to forget the added value you are getting from a high street retailer which justifies their prices. And don’t go for an audition in a shop just to then buy online. It is morally corrupt and ultimately bad for you as a consumer.

My message to AV manufacturers, distributors and retailers is to embrace the internet – ideally the AV Forums – and use it to get your message to your potential customers.

Note 1
Roughly half the UK population shopped online this Christmas, spending more than £3bn. Research shows that UK customers are among the most enthusiastic online shoppers. The European Interactive Advertising Association found that 30% of British consumers bought more than 16 items online in 2004, compared with 19% of shoppers across Europe.
Note 2
High street retailers have to pay for rent (expensive in prime locations), staff (highly trained staff are not cheap and 'highly trained' is what we consumers demand), demo rooms and demo stock. It is significantly more expensive to run a high street shop than a mail order business
Note 3
Paul Lee-Kemp of Sevenoaks has written an open letter to manufacturers highlighting the problem. He has ‘declared war’ saying that unless the pricing structure is made fairer, Sevenoaks will not stock their products.
Note 4
Is the boom in online sales and stiff competition on price good for us as consumers? On the face of it, maybe, yes. The price of equipment in ‘rip-off Britain’ is heading in the right direction, right?.
But I ask you to think longer term. If we do not buy from high street retailers then surely they will go out of business. Or at the very least the quality of their demo rooms / trained staff / variety of equipment will drop. Then our choice as consumers is diminished.
Note 5
What is the best way to buy kit? Personally I think we should read reviews by the magazines (online and print), compile a shortlist of the products which most suit our needs and budget, ask for advice from readers of the AV Forums and finally audition the kit yourself. The auditioning part is the most important because only you are going to know whether you like it or not!
Note 6
Besides offering us demonstrations, high street retailers can also install kit for us, calibrate it (no display is correctly calibrated out of the box), and offer an after-sales support service which can’t be matched by online retailers.
Note 7
Actually Linn have had a policy in place for over 10 years which states that a Linn dealer must be prepared to provide on-site support for its products. You don’t find Linn products being sold online.
Other manufacturers like Denon, Yamaha and Velodyne are insisting that their top-tier products are not sold mail order and some must be installed by the dealer.
Note 8
How the manufacturers are going to keep tabs on which stock has been sold face-to-face and which has been posted mail order is an interesting problem. Maybe it will be a cross-checking of serial numbers at warranty registration time?

[Azrikam]

Feel free to delete if this post wasn't meant for discussion.

Personally, I think this is definitely a problem facing the AV industry, but I don't think it's such a problem for the consumers.

Maybe the store-front option dying out is a good thing. I do nearly all my shopping online, and I do so quite willingly. Even if prices were the same, I'd still do so, mostly because of the convenience. During my life as an AV consumer, I have gotten more grief via high-pressure sales tactics from store-front shopping than I've gotten useful consumer information... and that's by a very wide margin. That's not even counting the misinformation. The consumer has more access to product information nowadays (via the Internet) than every before, and I wouldn't hesitate to buy an expensive sound system sight-unseen (or rather sound-unheard) if I'd read enough positive consumer reviews.

Obviously, this isn't for everyone, and a lot of people will be willing to pay a premium for store-front service. I do agree that high street retailers offer service that you can't get from an online store. But just how important these services are to the consumer will play a huge part in the future of traditional brick-and-mortar stores.

I disagree, however, with asking people not to audition an item in a shop and then buy elsewhere. The consumer has a right to not buy whatever they want. If a shop can't convince a consumer to buy from them, either by competitive pricing, quality service, knowledgable staff, customer loyalty, or any other means, then they don't deserve the sale. That's free enterprise in action, plain and simple.

You have to take into account that some people just don't live near any shops which demo products and some people buy without demo's ( i don't bother with demo's ) high street retailers service can be pretty bad too and some of their salesmen don't have a clue ( think shops beginning with c ) online retailing gives us great deals and stops us being ripped off by ridiculous high prices and to me that is a good thing as high street retailers mark up the prices too high.

Long term it can only be good for everyone if prices drop and if shops like sevenoaks suffer and have to close then so be it as i for one am fed up of rip off prices artifically kept high because its deemed that uk consumers will "pay more than other countries"

I am pretty disgusted that i bought a REL Q201E Subwoofer and then after finding out more information i could have bought a Velodyne or better yet an SVS subwoofer for the same price which would give a performance which outclasses the REL in every way, in other words i'm saying the REL subwoofer is overpriced for its performance and they get away with this overpricing of goods because the price is fixed and i actually bought that subwoofer from sevenoaks, its bad for consumers when prices are fixed and should be abolished so yes online trading is good.

It should be noted that i found out more information online about subwoofers than i would ever get from a high street retailer and the same is true of every product, the wealth of information available online means demo's are usually not needed and this is especially true when you belong to a forum like this.

The way i see it is that online retailers can give home demo's of the products perhaps by renting them out on a lease and if people like the product they buy it.

[arn]

Why don't the high street stores advertise there products on here and give a reduction to customers who come to there shop and buy (with an avforums coupon), I am not saying match the internet prices as you would expect to pay more for the high street service but some incentive would be nice.

Very Nice post by the way Stuart (good read)

[Aryxx]

I firmly believe that online sales give us a fairer price in 'rip off Britain'.

Besides, all internet sales are covered by an act of parliament ( I forget which one) that allows us to return products within seven days of purchase for any reason whatsoever. So you can still audition your kit and send it back if it's not for you. This is all done from the comfort of your own home too.

Now don't get me wrong, I still support the high-street retailers because they still have thier place and they excel in customer service and after-sales service.

Just my 2 pence.

[GFS AV]

I have been in a few high street stores, and have to say that the majority of the sales assistants have been either very patronising or like you to think they know much more than they do. I have entered AV stores before, and hate the fact that as soon as you walk over the line you're pounced on. I find the more high-end retailers tend to be very snotty and clever.

Given the above reasons, I, like many, prefer to click a button and get cheaper gear online, with the added bonus of not having to drive miles to go to your nearest dealer. I have bought equipment from Richer Sounds before. Not because I like the customer service (quite the opposite), but because it's cheap. I simply walk in, get what I want, then come out. The only added bonus is that if a product fails, you simply take it back rather than messing about with postage. In fact, I find the advice I receive via telephone with online retailers is far more accurate and helpful than any high street shop i've experienced.

I'm not saying all retailers are described as above. I feel sorry for the polite, genuine, helpful firms out there. In my opinion, it's the poorer companies that let down the AV industry. If walking into a high street shop was a much more comfortable, helpful, enjoyable experience, I think the problem would be solved.

I have much respect for online companies. 1. They can be very helpful indeed 2. Cheap 3. Sit back and wait for your goods.

The only drawback is not being able to demo the stuff. But for me, at an early stage find out what kind of sound you like, the simply get as much advice as you can from the forums, then start clicking!

And...on tyhe other side of the coin, some high street retailers will gladly "price match"...(Richer Sounds springs to mind) - while for others, "it's just not worth their while, because for every one person who comes in and asks for a price match, there's five mugs who won't"...(quote from a person who works in a "well known" high street retailer when I tried to price match some speakers...).

Again feel free to delete the post if this is not a discussion:

I agree that the manufacturers have to protect the UK distribution channel. But I disagree that we should avoid shopping around on the internet to help out the high street stores. The internet is a source of information agreed, but it is also an avenue to peruse the market to get the most for your money, we pay enough in taxes etc so why not save a few quid form shopping around. Granted the apparent AV store "tourist" scenario isn't morally right, but everyone does it. I don't know of anyone that would walk into a shop and say well you are £250 quid more expensive than a quote I was given but I'm you've been a great help so I will get it from you (at the most do you think an hour of a sales persons time is worth £250?).

My av equipment has the same warranty, so this is another reason why I don't have a preference to where I shop.

There are always places to view AV equipment such as trade shows etc. and to be honest I have never partaken in venturing into a high street store to peruse the projectors I am interested in. Having said that why should I pay for marked up goods like cables, amps etc when I can source them online for a fraction of the price?

When shopping online I have received some great help from online retailers, they are knowledgeable and spend a great deal of time answering emails and spending lenghtly time on the phone helping me out, I'm not saying that High street stores don't but its not convenient for me to go and spend an hour or more depening on where I have to travel. I like the fact that the internet has made products and pricing more accesable, so why try to illiminate this.

Just to be clear, I have no illegence to either high street stores or online retailers. As long as I get the most for my hard earned money and get the service I deem acceptable from who ever I wish to shop with, then why should the choice be taken away to protect high street retailers?

I know there are pros and cons to both ways of shopping and I agree that the manufacturers should control the cowboys that spring up overnight and disappear a few months later, but why should the consumers choice be taken away because of some disgruntled high street stores dictating to the manufacturer!

I may have misinterpreted your views but this is my own personal opinion and do not wish to cause any offence to any one.

[sc1977]

And don’t go for an audition in a shop just to then buy online. It is morally corrupt and ultimately bad for you as a consumer.

hmm dont know about the morality issue here but i WILL do this if it means i get the equipment i want at the lowest price

not one person can honestly say they relish the thought of throwing good money away on a duff purchase

and quality kit isnt exactly cheap!

[GFS AV]

Originally Posted by Family Guy

And...on tyhe other side of the coin, some high street retailers will gladly "price match"...(Richer Sounds springs to mind) - while for others, "it's just not worth their while, because for every one person who comes in and asks for a price match, there's five mugs who won't"...(quote from a person who works in a "well known" high street retailer when I tried to price match some speakers...).

Any chance of sharing the retailer with us?

[Malone]

Quite simply , sounds like the retailers need to get on their thinking caps and offer the purchaser an incentive, be that monetary, service or otherwise. All industries have to re-invent themselves otherwise they will go under.

Matt

Originally Posted by GFS AV

Any chance of sharing the retailer with us?

No - sorry.

[Astaroth]

I certainly dont believe that the high street retailers have the moral high ground; similar to Family Guy's comments above I have had a well known high street store 'price match' an item and the person behind me buy the identical product but have to pay 25% more than I did. When I went back the next day as I had forgot to buy a cable the same sales staff were there and laughing abouth the mug behind me who had paid so much more than I.

At the end of the day the internet is still a new venture, a significant proportion of the online stores do also maintain a physical store too and therefore do not get the 'savings' of being internet only (though lets remember that running a sucessful online store is not automatically less costly) and manage to compete pricewise with the online only retailers both online and in store.

I believe there are too many retailers who decided the internet wasnt for them/ wouldnt work etc who are now regretting making that choice when start up companies are starting to make greater profits/ larger customer base over the last couple of years and so now are complaining about the amoral customer, the unfair suppliers, the poor standards of their competition as a way of avoiding having to admit to making a poor business decision.

The way people buy products is forever changing - take insurance, 20 years ago you walked down to your broker and filled in a form. Then Direct Line started and a new concept of buying over the telephone was created - you lost the 'experienced/professional' broker (sales advisor) helping you and the 'aftersales customer service' (sound familiar?) but you got a cheaper price. Now this is changing also and more and more are going online for even cheaper prices. The result? people get cheaper insurance, a lot of brokers went out of business, the 'clever' brokers had to ensure that they added value in another way - preferably one which cannot be emulated by the direct sales option - if they cant then they will go under or be bought out.

There are services which a high street store can offer much easier than a online retailer - like custom installs, setup/callibration - and there are people who will pay the required premium price for these. What I believe is a sad state of affairs is that manufactures are being asked to fix prices against online retailers (and more so that some are actually doing it) - why should online retailers be penalised for being innovative/ successful (normally you get savings for economies of scale) or the free choice of not going online taken by high street stores be financially supported by their suppliers? At the end of the day the customer will pay for these choices and will surely vote with their wallet.

[AML]

I still feel that one of the reasons people in the UK are so eager to shop online is because they feel they are being ripped off by high street shops.

Same thing is happening in Japan. Shops here can charge nearly 50 percent more for a product we can buy online for nearly 50 percent less!

An example. My denon 3910 was purchased online for about 100.000 yen or 500 quid. The same player would have cost me 150.000 yen or even more at a shop in a place like "Akihabara" which is supposed to be one of the cheaper places to shop for electronics.

How can shops justify charging that much more for the same product?
Do they offer some kind of amazing service in their shop that you cant get online?
You may say "yes, they offer demos" but is a demo worth 50 percent of the price of what you are buying ?

Another point is:
Are the store clerk really all that knowledgable?
I always see them as sales people trying to sell me something and not really caring about what it is they are selling me. They just want their commision.

More and more companies try to sell us "the next big hit" and many people are tired of spending all their hard earned cash on something they may not even need. Blame advertising, the cost of having a staffed shop, or whatever u want, but I still think we are being charged through the nose for something trivial like a DVD player.

Maybe shops should disappear.
I know it would help to bring down the prices of the things I want to buy.
If I need a demo, im pretty sure my PC is capable of doing that. With faster internet connections coming out and PCs achieving same or even higher specs than the latest AV equipment, why shouldn't we be able to have an online demo?

As for the tea, well I can make that at home myself.

[harrisuk]

The big problem is that we pay so much more for this kit in many cases than consumers in other countries do. So people try to redress the situation by shopping round for the best deal possible, in many cases that means online.

Its a difficult one as in many cases there are real benefits from buying stuff on the high street, advice, being able to demo the product and most importantly warranty / exchange of defective products. The question is is how much more is this worth ? If its a cheap dvd player I dont see the value added in there. If its a £2000 plasma screen or projector then absolutely.

I have to admit I tend to buy the majority of my stuff online these days. I dont think it will work the manufacturers trying to stop their kit being sold online. They will just up getting a bad reputation and people who want it sooner an cheaper will just go the Grey import route.

I`m not really sure what the solution is to this to be honest.