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Sony Quietly Opening Retail Stores
as400tek writes "According to CNN, Sony
Electronics Inc. has been opening stores in selected cities all over the
US. Denver and Las Vegas are the next two location, or location numbers 11 &
12. Should the Apple retail model
be applied to Sony, and if so why didn't it work for Gateway?
Should Dell be next to enter you local shopping mall? Should large retailers like Best Buy and others be afraid of this model? Does this mean better service
for Sony's already nice line up of electronics?"
Clothing brands have own-label stores in outlet malls. There's been at least one Sony shop in Dublin, Ireland for probably about five years. This doesn't seem like news to me.
And that's a large part of it's "buy me" factor. Walking into a Sony store is much more draw dropping than your standard consumer electronics store and that experience probably leads to real money for them.
Boffoonery - downloadable Comedy Benefit for Bletchley Park
Canada and the UK has had Sony stores for a long time.
Oh, wait, this is news because it happens in the US and the world ends at the US border.
The rest of us in the world does not exist anyway.
Plus, who shops at the mall with $1500, ready to buy a computer?
Sony may work because they sell lots of stuff that is cheap enough to inspire impulsive purchases. You go in, look at the neat gadgets, and the next thing you know, you whip out your credit card, and buy a $250 mp3 player.
A PC store is just not going to have the volume of sales in a mall setting to support it.
And it won't work for Sony. Both companies compete in the super-commoditized consumer electronics market. Neither of them have any real competitive advantage, other than Sony's fading brand name. Apple never tried to be the lowest cost provider; they have products that competitors either don't have or are not the same. The store model works for Apple because they compete on their own merits and people will go out of their way to buy Apple products. Granted, they are more expensive and often very proprietary, but they have a significant fan base. Sony and Gateway do not and will not have this advantage, therefore the only thing they will have to compete on will be features and price, just like every other electronics company. They will have a hard time keeping up with the massive flood of cheap consumer goods sold at Best Buy that are brought in by the boatload from Thailand and they will suffer miserably.
It didn't work for Gateway because Gateway was more like a "CompUSA" (a store I loathe) and Apple is more like a high-end boutique. I realize that both models have their place and can be effective, but Gateway's essentially selling commodity goods while Apple sells a whole "lifestyle." Visiting an Apple store is an experience in itself and has drawing power. Nike stores are similar in this way (at least the major one here in San Francisco).
We also have a major Sony presence here The Metreon and its own Sony Styles store (although as a poster above points out, it's not exactly perfect). and I think Sony will do it a lot more like Apple based on what I have seen (high end fixtures and architecture, high-drama).
This is a smart move for a brand like Sony--they need to recapture the caché they once had more of.
"...all the labours of the ages, all the devotion, all the inspiration, all the noonday brightness..." yada yada
Nobody buys a gateway because they really want a gateway.
But some people actively seek out sony products (i cant imagine why, but my brother has spent THOUSANDS on them, and lots more replacing them when they break). The same is true of apple. They are as close to "designer" brands as we have in electronics.
People do buy luxury watches, clothes, food items in store when they could get them cheaper online - it's more about the experience than the price.
Gateway's products were all commodities w/Gateway badges on them. Why would anyone buy regular PC hardware from a specialty store?
When you buy a computer from the Apple Store, you do not buy a commodity item; you buy an "Apple." You get the style, the culture, the product line--iPod, iMac, iBook, PowerBook, Power Mac. Apple is somebody who sells a lifestyle, and that's what justifies an "Apple Store."
Alan
They'll be the most expensive place to buy Sony products, only carry home electronics (no computers or parts), and be staffed by people who know all the buzzwords but have little idea what they mean.
There's one at South Coast Plaza (costa mesa, CA) and it's kind of cool to wander around and see all the gadgets. Once.
Since they only sell the one brand, there aren't a lot of new products to draw people in. Plus it's retail prices for everything so you'd never buy there, just look and go home and order online.
Comparing it to apple stores...
* apple has a genius bar staffed with people who can often fix your problem right there. sony had some sales vultures trying to sell me a plasma.
* apple has 3rd party software available for purchase
* apple stores (some of them) have a closeout/discount bin for cheapskate shoppers to check out
* apple's products are just better designed than sony
* everything in the store is compatible with everything else
* grassy knowl and start button on every monitor makes the sony store look a lot like best buy or compusa
Should large retailers like Best Buy and others be afraid of this model?
It's about market presence and Sony ego. They no longer dominate by superior engineering so they will try to dominate by glitter and youth/yuppie appeal.
At least that's this old geek's opinion. And I've been watching Sony for 30 years.
"Eve of Destruction", it's not just for old hippies anymore...
The brick-and-mortar chain stores have to be losing money because of people doing this. I'm sure they will try to close that loophole somehow - maybe private branding, or membership-based stores.
As it becomes harder for the internet shopper to see products in person before ordering, the manufacturers will have to step in more and more, by opening their own retail outlets. Even if those retail outlets don't make a sale directly, the manufacturer still wins as long as you buy their product.
I predict it will turn into manufacturer-supported expo "stores". The primary purpose being that you can come and check out the product, with no pressure to buy, or maybe even no option to buy. Somehow, the cost structure has to get re-aligned so that the manufacturer foots the bill for demo-ing the products in person.
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Problem is, Fry's is being scewed. I go to Fry's to see the product in person. Fry's has to pay for that store to exist, to have the products on hand, to have enough staff to answer my questions, etc.
But since I don't buy it from Fry's, they lose all of that pre-sale investment. The online store gets all of that pre-sales investment for free.
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They've had these stores for years, I first walked into on in Chicago back about 1992 and looked at most of what they had, because I was looking for a model of portable stereo only available in Europe and Japan (which internet dealers are only too happy to sell you, where once you were pretty denied, thanks to their bizarre marketing.) I don't know how much they sold, as they were usually a bit above what you'd pay at discount stores, but were placed in the fashionable downtown areas.
A feeling of having made the same mistake before: Deja Foobar
...but I buy from Fry's. If I go, I need/want something now, not 2 days later. Greatest thing was to move back to where there's a Fry's Electronics store within driving distance. Only thing marginally close to it in Chicagoland were the Microcenter stores and maybe the CDW showroom.
There is something to be said for being able to look at 20 different somethings.
While the price might be slightly higher for the unit, I don't have to pay shipping...
At a Gateway store, you couldn't just buy a machine and take it home. Add to that, the fact that they just overbuilt like hell, and it's not too hard to see that they were doomed to failure.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
I picked up a pair of V6 headphones (Thank you Sony for bringing them back!) there and everyone was nice and knowledgeable. According to one employee they've been open for about three months.
Ah, nice to see someone who knows a little something about headphones. I used to keep a pair of these at work. Unfortunately, I managed to lose them somehow when I moved... Oh well, they served their function well.
Gateway, on the other hand, had no such advantages.
No. Dell makes money through scale of economies and efficiency of operations. They make low profit margins on high volumes of products.
Retail stores are one of the least efficient operations, and don't do well with products with low profit margins, unless volume can somehow compensate. But computer stores generally have the problem with slow inventory turnover, due to the >$1000 average price barrier.
There are several other reasons why Dell shouldn't enter this market. Dell offers very dynamic pricing on its website - today, it might offer 15% off its Inspiron notebooks, and tomorrow that pricing might disappear. It much more difficult to attract customers to a store with seemingly random pricing.
Also, Dell is heavily into the market of selling peripherals. In fact, customize a computer on Dell's website, and you'll see the option to buy a printer before you see the option to configure the computer's memory.
Not at all. Best Buy competes through the resale of a wide variety of goods at competitive prices. Sony and Apple compete through the sale of a small variety of products at high prices.
Simple answer: No.
The major disadvantage of any "Sony" or "Panasonic" or "Tommy Hilfiger" branded store is that you're limited to just that store's brands. That automatically cuts down a lot on selection, and frankly, I could care less about shopping at a store that carried only Brand Z. Now, with Apple, it doesn't matter, because Apple lives in this isolated (shiny, glossy) Ivory (G5) Tower where by design, everything is Apple! Connect your Apple iPod to your iMac and listen to iTunes while chatting on iChat with your iSight etc. etc. etc. etc. This doesn't work as well for Sony and much less for brands that are not brands at all (frankly, I'm surprised Gateway is still even in business).
These brand stores have been around for a long time, just not for PCs. If anything, they work as sort of a Branding Litmus test. Note here: we're not talking about the brand, or the product, or the features, or the service, but The Brand(TM) in the classic business sense, that is, what does "Ford" or "Nike" or "Post Cereal" mean to somebody. If your Brand(TM) is exciting, then those stores will help bolster it, especially if your store is put in high profile, mass-market (but gaudily touristy) locales. Think of all the stores in Times Square. Suddenly, Toys 'R' Us, Sanrio, Cold Stone, etc. are all a bit more high-profile because now Grandma goes back to Scotts Bluff, Nebraska and tells the grandkids of this place she had ice cream in New York City and wow! was it neat etc. etc. And the truth is, many of these stores willingly refuse to profit on these locations, or, knowing that profitability is not likely, charge a huge amount on their goods to at least cut down on losses. So now the Hitachi store in New York City lost $150,000 last year but, hey, that's not bad considering it's a store IN NEW YORK CITY! and that's pretty exciting. Apple is doing something very similar. It started out in major markets, then hit secondary well-off markets (ritzy suburbs in Baltimore, Jersey, etc.). Now they're making their way into the local mall. Fashionable Brands like Sony, Apple, Alienware, Bose, Svarowski, etc. can do well in these. (Note, apparently in my example fashionable means "Overpriced"). Unfashionable brands like Gateway, Aiwa, Timex may not do as well.
So, no, I would not worry if I was Best Buy. If anything, Best Buy will now be helped by Sony stores, as people go into the Sony store, see the MSRP $4999 Wega XBR HDVDDHDHD-SACD Orgasmaplasmatron, are astounded, then are even more astounded when they see it at Best Buy for $3449 (plus you get a Day After Tomorrow DVD) and finally decide to go with Sony over JVC in their $400 TV purchase just because Sony opened up a store between The Gap and Starbucks at the mall.
Small potatoes make the steak look bigger.
Sony have an advantage over Apple in that they can sell you a complete set of electronics (mumble digital lifestyle mumble buzzwordnonsense) that's all styled and behaves consistently. I've also noticed that Sony TV/VCR/DVD machines transparently integrate quite well already; As they and the other asian manufacturers put smart networking in these things Sony ought to be doing some pretty special things in these stores in years to come. ;)
They may well not, of course, but I like Sony, so I'm rooting for them to do it
Chris "Ng" Jones
cmsj@tenshu.net
www.tenshu.net
Sony and Apple are nothing like Gateway and Dell.
Sony and Apple are companies that sell products that include elegance and Quality.
Gateway thought people would be willing to buy computers in a barnyard, and Dell seems to think that because they started in a dorm room, that people would be willing to put up with stores that look like a Dorm room.
Here in Austin, Dell shut its Outlet store becuse people didn't want to buy computers in a flea market atmosphere.
Until companies understand that people will pay a premium for a product because of better design and quality, they can open all the stores that they want and they will ultimately fail. This is the 10th anniversary of the Dell.com website, and in the Austin paper it pointed out that Dell has an amazing amount of business through that website. Those are their customers, people who already know what they want or people that think that computers are a bit like cars, and since it has 4 tires, they really don't care about quality.
Gateway was just never going to be able to market the barnyard atmosphere anywhere but the midwest. I can see a Manhattanite using OSX, and with a Sony wall of components, but just can't see them waiting for the cow to arrive.
But this is a dog-eat-dog world. Why should I buy it for anything but the lowest price? If it's a mom-and-pop store, I may think twice - but the cashier at Best Buy or Fry's doesn't care one bit. There is no point in showing that cashier or mega-corp any form of respect. They would screw you over just as quick if they thought they could get away with it.
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