Don’t Let Disruptive Innovation Kill Your Business
Every year, new innovations in consumer electronics disrupt our world, making it harder for custom retailers and integrators to succeed. The Great Recession simply made matters worse, and masked these trends. Look at these ominous developments:
• Lower TV margins—from thousands of dollars profit per TV six years ago, to a few hundred dollars (or less) today.
• Step-up features continue to trickle down-market, undermining consumer demand for high-end products.
• Many premium audio and video brands have disappeared. Of those that survive, more and more are available in big box stores or through distribution—diluting their value for specialty dealers.
• Internet discount pricing, not MSRP, has become the reference point for consumers, even on premium brands.
• Enforcement of MAP and UPP is sketchy. Some manufacturers’ websites even sell to consumers at below UPP/MAP.
• Showrooming and e-tailing are killing the retail business model. Amazon sales climb every year. What was your best year?
• Electronic Service Providers—Comcast, ADT, Verizon and ATT—have invaded our turf, with simple automation widgets, installed for $99. Plus monthly fees.
• Apps for phones and tablets have bought the Digital Hub concept into the home automation sector, disrupting the dedicated remote control sector. Apple Stores even offer a three-hour seminar on home automation, and sell a range of IP thermostats, lighting controls and security widgets—with iOS apps, of course.
• Our marketing voice is being silenced. Print-based advertising is dying, and TV viewers tune out ads with the mute or FF button. While manufacturers continue to advertise their products—and trade organizations—to promote training, no one is presenting the big picture in home integration: explaining what each feature can do for consumers, and how technology integrators add value by tailoring these features to individual lifestyle needs.
In sum, we’ve lost our identity and our clout. Revenue streams are drying up, and the custom retailing model is dying. It’s time to move forward and become profitable again.