I-Spy - Can Big Chains Do Custom?
By Ron Goldberg
There's a lot of buzz in the custom business about impending competition from CE chain retailers who want to get into the custom market. Depending on who you talk to, the thought of competition from the likes of the "big box" stores is either laughable or terrifying. Those chains have spent the better part of two decades refining the price-driven, warehouse-type shopping environment that has come to dominate the CE retail landscape. Smaller chains may differentiate themselves with knowledgeable service or different product lines, but on many levels, they still have to compete on the big chain's playing field. Can any sizeable CE chain evolve from the box-moving model and really offer the consumer the personalized solutions that the specialty C-tailer can?
Custom Retailer wanted to find out, so we sent a "mystery shopper" to several chain retailers in the New York-New Jersey metro area to see what happens when an ordinary consumer with ordinary custom needs goes to the bigger chain stores. Our mystery shopper was a perfect specimen for our test. A relatively savvy CE consumer, he already owns an HDTV-ready TV, has a surround sound receiver with multi-room capability, and is interested in upgrading his setup. We asked him to shop for custom-installed speakers for his home theater, and a set of controllable remote speakers for a second room in the house.
We chose four representative retailers, ranging from specialty chains to national mass merchandisers. The nationals were Best Buy and Circuit City, two likely "first-stops" for many ordinary consumers. The regional chains were PC Richard, which has 42 locations throughout the New York-New Jersey metro area, and 6th Ave Electronics, which has 7 stores throughout New Jersey.
FIRST STOP: BEST BUY
Sending a mystery shopper to a Best Buy outlet with a custom install request was a bit of a loaded deck. Even though the Minnesota-based chain is the largest national CE specialist, the company's retailing model is largely based on self-service. In an environment where prices are low because the service component has been minimized, we didn't expect much from our visit to "Big Yellow." Still, many smaller C-tailers quake with fear at the thought of Best Buy entering the custom market, either by building or buying their way in. By sheer force of numbers, they could be a formidable competitor—if they can successfully offer custom work. Can they?