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Paul Kunert is the editor of Channel Register
By | Paul Kunert 19th April 2012 10:42

'Perfect storm' drives electronics stores to EXTINCTION

Supermarket and web rivals will eat retailers alive - analyst

The window of opportunity for traditional bricks-and-mortar consumer electronics retailers to catch up with web-based and supermarket rivals has closed and many more will go the way of the dinosaur.

So says channel beancounter Canalys, which predicts others will follow in the footsteps of monolithic consumer outlets such as Best Buy Europe, CompUSA and Circuit City.

Retailers were "hit by a perfect storm", with supermarkets and etailers selling tech at lower prices and could not match the stock variety, more favourable returns policy, peer reviews and free delivery of online rivals.

"Consumer electronics retailers now offer very few benefits to consumers," said Canalys principal analyst Alastair Edwards.

He said they appeal only to a rapidly shrinking group of individuals that are "unable or unwilling" to jump on the web with credit card in hand, or to impulse buyers who want to pick up a products immediately.

The sucker punch for many came when the lucrative extended warranty revenue streams were restricted after the European Union's directive to vendors to slap two-year support on kit as standard.

Canalys said consumer electronics retailers "failed spectacularly to respond" to the warning signs of the last 15 years and the accumulative effect can be witnessed on the High Street.

In the UK, Dixons Retail has closed stores; Best Buy pulled the plug on its European experiment and is now culling big box stores stateside; and other games and CD/DVD retailers are also feeling the squeeze.

"The window of opportunity has closed," said Edwards, "they will never catch up with the internet specialists. They started late, under-invested and could not build a culture to excite talented programmers."

Retailers did not want to undercut store prices on the web and wrongly assumed the "touch-and-feel" element that influenced older shoppers would safeguard them with younger generations, he added.

Efforts to replicate the Apple Store experience may prove ill-founded as the product ranges of other vendors may not attract the same footfall, but the modern settings, levels of advice and celebrity promos could appeal to some, the analyst said. ®

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