prevailing over the big box
Years ago, there was an office supply store on every single street corner in America. Today, a few big-box stores, like Staples and Office Depot, have taken over and all the mom-and-pop stores are out of business. A few of the mom-and-pop stores moved upscale, so the very well-to-do can get personalized stationery and other specialized paper products at very high prices.
The last 10 years, the custom business has done very well; new businesses have continued to open and the introduction of flat panels has created a whole new business for the middle- to upper-income families. But it might be time for the custom installer to take a hard look at his business because today is not like yesterday.
The downward pressure on flat panels and the big-box retailers’ interest in custom business is changing the landscape drastically, and, unless the custom installer adapts, he might BE CAUGHT IN THE MIDDLE and before he knows it, he might go the route of the independent office supply store of years past.
Best Buy today is working very hard to mean everything to their customer: the Geek Squad, Magnolia, etc., are clear signs of this. They can buy better and now also install, and there is a high level of trust between Best Buy and their customers. Best Buy is working hard not to be in the middle. They cannot do the very high-end jobs; on the other hand, WalMart is constantly trying to provide lower pricing than Best Buy.
The regular custom installer cannot be price-competitive on flat panels, as they cannot buy enough and, at the same time, the big-box retailers are trying to take over the installation jobs.
Educate your sales force and installers to become superior to Best Buy, and give them the flexibility to quote jobs where they can compete. In the future, the products themselves will just be flushed through at no-profit pricing and the margin for the custom house will be in services and labor. This is an area where the big-box retailer is not cheaper.