Retail Goes Custom

There's a new big box retail mini-chain (5 stores) here in Northern NJ, Electronics Expo, and it is unlike any other big box retail store I have seen. The CEDIA custom installation market is growing at double digit rates, and Electronics Expo is essentially a gigantic showroom for flat panel displays, front projectors, and more flat panel displays. The highlight of the store is the second level - a walkthrough of a 'model home' with flat panel displays absolutely everywhere. Extremely high end receivers - though no separates - are arrayed in two of the rooms on the main floor, but the speaker selection is paltry and tops out at mid-tier brands (Polk's LSi line and Monitor Audio). There is a whole house audio system on display (Yamaha's MusiCAST), a few MP3 players out front, and small counters for digital cameras and camcorders near the entrance.

Some observations:

• The first page in Electronics Expo's brochure highlights the availability of CEDIA custom installation for its products. Given the product selection and pricing, installation services should be a significant profit driver for Electronics Expo.
• Consumers are spending money on video, not audio, and that is the focus on the sales floor: high end video. The selection is not what a videophile would consider high end, but close.
• It's clear you can't compete with Best Buy, Circuit City, Target, or Costco on cameras, computers, DVDs, video game systems, and even most TV categories.
• Pricing is almost ludicrously high; nearly everything was MSRP, and the sale prices were not competitive with sale prices elsewhere or online.
• The store's square footage is equivalent to a small Circuit City. The level of sales help was equivalent, too -- nowhere near as knowledgeable as at many small specialty retailers.

Bottom line: Electronics Expo has a nice showroom format, which could seriously hurt specialty retailers, forcing those without significant high end clientele (those who demand truly high end systems, not just "better than at Best Buy") to become full time custom installers, and drop their retail storefronts. But Electronics Expo is counting on the continued desirability - and premium pricing - of flat panel displays. Given the poor sales help and high fixed costs for the big box showroom format, if prices on high end panels drop, Electronics Expo is going to have to find something else to sell. I have long advocated that Best Buy dedicate more floor space to lifestyle demonstrations, custom installation, and front projection; if it does so, it could bury Electronics Expo on price.

-avi

Comments

[Jason]

On your "Retail goes Custom" post did you mean Electronics Expo in place of Unltimate Expo? If not, where are there any Ultimate Expo's?

[Avi Greengart]

Jason, glad somebody is reading this! Yes, that was a serious typo. I've corrected it.

-avi