Changing Strategies

The merging of IT and CE technologies, much of it due to home networking and the entry of PC titans Gateway and Dell along with their aggressive pricing strategies, has made traditional CE retailers scramble to come up with ways to remain competitive.

That's the clear message in several

From the CEA's Winter Summit in Aspen, Colo. (see p. 1), to a follow-up on our International CES Retail Roundtable (see p. 18), to the Home Theater Specialists of America (HTSA) buying group meeting in Florida, everyone is talking about meeting these new challenges.

Senior editor Alan Wolf took a version of our TWICE CES Retail Roundtable "on the road" to the Consumer Electronics Association's 2004 Winter Summit in Aspen. The panelists — Abt Electronics' Michael Abt, AVB/Brand Source's Bob Lawrence, Murray Huppin of Huppin's Hi-Fi and Bjorn Dybahl of Bjorn's Audio Video — were all concerned about the new, even-for-the-CE-industry, thin margins that Gateway and Dell have introduced. A couple of the panelists hinted that they might turn to direct sourcing for some goods, and one might even put its own brand on them.

Also in this issue we published some additional discussion from our CES Roundtable. (See TWICE, February 23, p. 16 for part one of the report.) In it, Mike Litton of Best Buy discusses his chain's "Geek Squad," which brings education, service and installation home to the consumer.

CompUSA's Larry Mondry said that his "Unmatched" service goes like this: "If you want to buy pretty much any electronics-type product, we'll install it for you and train you on how to use it for free."

At the HTSA buying group meeting, senior editor Joe Palenchar found out that this group wants to expand its membership and go national, and tell its story through consumer advertising.

HTSA consists of what executive director Richard Glikes claims are the largest home theater retail installers in their markets. As home theater and IT-based home networking intertwine, Glikes said HTSA wants to establish its members as "national leaders in the sales and installation of … home theater systems, whole house electronics, convergence products and emerging technologies."

And yours truly spoke with Kevin Murai, president of Ingram Micro North America. Talk about IT expertise, Murai sees the convergence of technology as an opportunity to help traditional CE companies compete against new competitors from the computer business. Home networking is the key in this newly converged world. Or as Murai put it, Ingram can help many in the CE market to "sell the whole solution" — products, installation, service and retailer education.

There are plenty of solutions to consider for the new challenges that the industry faces. Will all of them work? Probably not. Will implementing new strategies be expensive initially? That's likely. But it will be more expensive to keep a "business-as-usual" attitude during these changing times, when key customers and sales volume move from your stores to both new competitors and existing-but-revitalized ones.