Musing on the future of high street electronic retail. Part I.

9 November 2011

There's few things I like musing about more than what comes next for high street retail. Anyone reading Bitterwallet or active on HUKD probably agrees with me that the high street electronics chains are a terminal case without much reason to look into resuscitation options - the recent Best Buy and Comet collapses back that up - so we don't have much to talk about there. Let's move straight to what the future of the high street may look like for electronic retail presuming that big box dies.

The biggest problem for any bricks and mortar retailer is that there isn't an information gap for consumers anymore. You could look at the past decades of high street retail as being an arbitrage of information - the chains knew where to buy goods cheap and the consumer couldn't easily compare the prices and sources for goods. The retailer was able to profit off the consumer not easily knowing whether their pricing was good or poor. On top of the pricing information gap you also had an information gap where the average consumer did not have a reliable source (we're talking large scale adoption of internet) of information on what product was suitable for needs, reviews, and other unbiased advice. So the consumer was really reliant on the high street retailer for product/sector advice as well as honesty in pricing competitively.

Now that information gap is gone and the average consumer is becoming more and more product savvy (they don't need the retailer's help in evaluating a product) and price savvy. This is becoming even more pronounced now that mobile has come of age and we're able to product *and* price check in store.

High street retail has pretty much become a free product showroom for Amazon to sell products. We are already at the point where a consumer can walk into a store, check out the physical product, compare online and buy immediately from an online retailer for delivery today (admittedly only in the major centres aka London). The b&m retailer is supporting that purchase without making a pence from it and Amazon (plus the consumer) is laughing all the way to the eBank.

Oddly, combined with this shift to buying online using the barcode of the physical product we also seem to like buying online to pick up offline… which is the reverse of the above trend. Argos have been issuing profit warnings but it does seem to be the case that many are buying from Argos online to pick up in store - thereby getting the pricing advantages of online with the immediacy of product pickup.

Even when things fall apart in the current high street/big box model there does seem to be value in a physical presence for consumers, whether it's for immediate purchasing gratification or to evaluate physical products. And yet there doesn't seem to be a way to support a physical presence and remain competitive on price. So what could the new models of electronic retailing look like?

TOPICS:   High Street News   Gadgets


  • currentbestbuyemployeeformerdsgione
    Another great article... while consumers have now become the price and tech savvy people they are, the future is very bleak for ANY big box electrical retailer. Fast forward to the fact that the supermarkets are also squeezing the profit margins down on these items by slashing the prices on the products then clearly the days of the big box are, very sadly, coming to an end. And those who have said "We just go in their to look and then buy online" - HEED THIS SIMPLE WARNING - one day the option will be gone... Who will you go to then? In five years it will be interesting seeing these 'savvy' consumers who look at a limited range in Tesco, speaking to people who know nothing about them, and wandering "I wish there was a place that had all this stuff in with people who know about it"
  • Aaron
    “I wish there was a place that had all this stuff in with people who know about it” - i wish this was the case now, have you spoken to anyone that works in comet?
  • Paul Nikkel EDITOR
    I'm with Aaron on this. I think if Comet/DSGi/Best Buy had the kind of advice you can get on avforums from other consumers IN their store then we would all go there more often.
  • JonB
    How about this model: Online retailers (OR) could pay b&m stores commission on sales which are a result of customers buying after viewing at said b&m store. B&m stores could even make it easier by offering buyers the options of: 1. Buying in-store at OR price plus a modest handling charge. 2. Buying online from the OR at the given price and delivery cost. Either way the store could claim some compensation from ORs. This would effectively turn b&m stores into showrooms. They could sell after-market intangibles (such as warranties) to make more money out of the system.
  • Dick
    > And those who have said “We just go in their to look and then buy online” – HEED THIS SIMPLE WARNING – one day the option will be gone… Who will you go to then? I will use online reviews of products. It is not hard to work out which ones to trust. If online retailers want a bite of the cherry, then they could set up PCs in their stores so customers seeing the products there could opt to buy online, but would go through affiliate links, much like HUKD, MSE and the rest of the internet. Of course, they wouldn't make as much money from their instant sales and would probably lose customers to the internet but they would get a little back - especially if they are likely to lose customers anyway, it might work. Although then the savvy customers learning about using the internet instead would soon look instore, and just go via topcashback themselves at home / smartphone. So maybe the answer is charge people to go into shops to try out goods.
  • Mad H.
    I think there's still room for specialists like Richer Sounds - there's real value in being able to see/hear specialist AV equipment before buying. The same cannot be said for the vacuum cleaners, washing machines and £70 HDMI cables which take up 75% of DSG's floorspace
  • Alexis
    You feel completely ripped off buying from the high street. I only tend to buy stuff when I really really need it, and you walk out knowing full well you've just thrown a few notes down the drain. The £70 HDMI cable mention above is a classic. I tried to get a TV from Richer Sounds but every store I tried was out of stock. Even when high street prices are ok, stock supply still seems to hamper things sometimes.
  • Paul Nikkel EDITOR
    @JonB/Dick - Yeah that's a model I've thought of also. It's a more positive outcome than putting mobile signal jammers in the stores (I bet anything that we see this happen in the next one or two years as desperation kicks in).
  • cheapfred
    I've noticed that GAME have started to put their "own" barcodes over product barcodes to stop the Red Laser brigade, (like me). Wanting to buy online and pick up offline is a reaction to the debacle that is C(Sh)it(t)yLink and the other gorillas who end up leaving you directions to their business park lockup address... As to the future, at some point a tax on online purchases will be applied. Government tuning, just like the clampdown on Jersey VAT dodging...
  • Dick
    Why would the government step in? They don't actually lose much whether the items are bought online or instore (it's just the VAT on the difference). If they taxed online purchases, that would just drive people to online purchases from abroad / Eurozone, which would probably still be cheaper with postage than going instore.
  • Paul Nikkel EDITOR
    @cheapfred - Really?! Haven't noticed that barcode trick (admittedly I don't shop at GAME). Have you seen anyone else do that?
  • Tim
    Lack of stock really frustrates me now. Although I buy online for most things, there are some occasions where I want something from the local store, mainly because I need something now and many of the online options take 2 days or more to deliver (even if you pick the 'next day' option you then find it's only next day from when they ship it which isn't until the next working day and sometimes they fail to ship when they say they will. Then when they do you're at the mercy of Royal Mail often). Sometimes I'll look locally also if the only online options are retailers who don't mention stock levels, as I can almost guarantee I'll place and order and then get an email back saying it's not in stock. So when I need it now, or I need to try something first, I look locally, but the majority of the time they don't have the stock. The option they provide often is to pay up in full and they'll order it in, usually taking a couple of weeks!
  • Xyzzy
    A pence? A penny! Pence is the plural of penny
  • oliverreed
    The consumer used to be a troll placing their misguided faith in an instore (commission lead) expert. Now shops are staffed, in the main, by trolls serving a more prepared and researched customer. The consumer wants the cheapest immediate item, instore demos have their time and place, but aren't always essential. A small toy francise local to me competes well with Amazon, big box needs to think harder. Assuming John Lewis is a diverse big box didn't they make massive profits last year?
  • PaulS
    Why will bricks and motor shops die? Because they will kill themselves. I went to my local Currys last night as we are looking for a new cooker (tempted to have a browse by the 'sale' that ended last night). My girlfriend didn't like the model I was originally looking at and picked another (more expensive) one. I did a quick Google on the model and found that the Dixons website sold the exact same cooker for over £100 less. When the salesman finally decided to grace me with his presence (20-25 mins after walking in) I asked if he could price match the Dixons one - knowing that it is the same company. His reply was that I should just leave and go order it online as they will not match the price even though it is the same company and the stock will be from the exact same warehouse. Needless to say I walked straight out in slight shock with a salesman not wanting my business - but at least got a good up close view of the cooker and had a good play with the bits and bobs.
  • commy
    Dixons is there for internet buyers, Currys is there for....people who wanna browse and buy at Dixons online. and yeah they wont price match. same parent group, same SKU codes, but as Dixons has no stores, no price match.
  • Spen
    Best buy used to match amazon (and other major online retailers) prices and give you an additional 10% of the difference. Real pity....
  • PaulS
    But Commy, as Currys would not pricematch their own parent company's website my money almost went to a different online retailer (who incidentially had better customer service reviews) whom Dixons was set up to pricematch against (but was actually a penny more expensive). Only the fact Dixons gives 1.5% Quidco saved them. DSGi was lucky to get my money but their silly rules almost lost a sale and potentially repeat business in the future
  • commy
    currys and PC world don't price match internet stores..parent company or otherwise. most high st retailers dont. simple as. dixons was taken off the high street for this very reason. to have a sole online presence to compete with the likes of Amazon etc. it just causes more confusion tho, as has been demonstrated. it costs money to run stores. lots of money in rent, rates, electricity, employees, POS etc etc its cheaper to run an online site

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