Published On: March 29, 2010

Competing With Costco When Selling HDTVs

Published On: March 29, 2010
Last Updated on: October 31, 2020
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Competing With Costco When Selling HDTVs

How does the specialty retailer compete with Costco and the other big-box chains? Jerry del Colliano shares his thoughts on value-added services and the art of the upsell. Take the right approach, he says, and you will have success.

Competing With Costco When Selling HDTVs

ChristopherHansen-Soundroom.gifSome of the happiest days of my life were spent selling audio video gear as a teenager and college student. As a freshman at prep school in Philadelphia I worked as an AV salesman at Bryn Mawr Stereo to fuel my Dad's 1981 Mercedes 300SD Turbo Diesel as well as to pay "rent" on the car as he didn't want to give me a car like the other kids. I had to earn one, which I did relatively quickly - a new 1992 VW GTI. Later I worked at Sassafras Audio selling more audio and home theater to well heeled residents of "The Main Line" area outside of Philadelphia. After packing up the GTI and driving Los Angeles to go to music school at USC, I ended up working for high end salons including the famed Christopher Hansen Ltd. and Mark Levinson's Cello Music and Film. While my heart (and wallet) was always into audio first, knowing how to sell video along with high end audio was absolutely key to making close to a six figure living (even part time) in the specialty AV business. It didn't matter if I was selling Mitsubishi or Pioneer Elite big screens to rabid Eagles fans back in Philly or nine inch CRT projection systems like the Vidikron Vision One complete with a Faroudja VP400a video processor to studio executives in West Hollywood. Successfully selling video was key to success in that early part of my career.

Today, selling video is both easier and a lot harder. Overall, video as a category is easier to sell because consumers believe what they see more than what they hear. That's just human nature. But commoditization of flat HDTVs have made things far more difficult in terms of differentiating product and/or maintaining sustainable levels of profit margin for specialty dealers. Without question, video drives consumers in the door more than audio and video leads consumers to spend on audio but when competing with Costco, Wal-mart and other big box or warehouse chains, how does a dealer woo a client today? Because it ain't 1990 on the floor of Bryn Mawr Stereo. A lot has changed since then.

First off, Costco isn't the enemy - even though they get beat up a lot by dealers - because they have truly changed the way the game is played when it comes to selling video. Costco and other warehouse or big box retailers have the buying power to make expensive AV technologies mainstream and they did that with the likes of Vizio and other brands. Offering "more HDTV for half the price" is a value proposition that consumers understand even if they are full of "pigs in a blanket" from the last aisle's end cap promotion sponsored by Kirkland. In my era in the early to mid-1990s, Circuit City had access to Sony video products at prices so low that they could make money selling Sony CRT televisions at below our cost at Bryn Mawr Stereo. What I didn't understand then was that the new Circuit City store was advertising on television, radio and in newspapers so that on Saturdays we had more traffic coming into our store asking why we were better. The sales staff that was prepared to answer that question made money and often racked up the "Mitsu Bucks" at a record pace. I think every salesman in that store had a Mitsubishi big screen TV, thanks to selling enough of their sets to win a set.

Today's specialty AV dealers must be prepared to sell professionally against commodity video. When a customer comes into the showroom looking for video - the issue of TVs that you can buy at Sam's Club or Wal-Mart must be addressed. Lines like "Sir, this HDTV is not only 3D capable for the future but it has all of the settings for an ISF calibration. ISF calibrations help you get up to 20 percent more performance from your HDTV as well as help them to last longer. We also deliver your set, install your set, calibrate it (of course) and add an extra year of warranty that I don't think you will find at the big-box stores. Would you be interested in having us reprogram your universal remote? Oh, you don't have one? Would you like to try one out? Here's how the TiVo works. Here's how the Blu-ray player works? Have you ever seen Apple TV? Do you have a surround sound system? Have you ever seen the difference a video cable can make? Do you need a power conditioner for your video system?"

Clearly, you've just witnessed a significant up-sale and there needs to be some qualification as to budget, but you've also seen many of the goodies that a dealer can offer a consumer. When it comes time to compare price - a warehouse store is almost always lower, but does the consumer really want to lug a big HDTV home to save say $200? Do you want to mount it to the wall yourself? Have you ordered the right bracket? Is the set bolted into the studs or could the HDTV fall, thus creating a safety issue? God forbid anything ever went wrong with your set but do you want to take it off the mount and schlep it back to the store and wait in line to repair it? Remember the extra warranty the dealer offered in the above pitch? That also means that they come to your house and pick up your set if it ever needs service. With the ISF calibration that their three techs flew to Los Angeles to study for - the consumer is less likely to need a repair but if you ever do, you are better taken care of with the specialty AV dealer. More performance, longer life, more safety and less grief has to be worth a few hundred more dollars isn't it? (Can you say "always be closing"?)

Consumers love added value. In fact, in this economy they demand it. BMW hammers Mercedes and Audi because BMW offers four years of service to the other two year plans. Being able to offer more value than a store that sells Pepsi by the 32 pack next to an LED HDTV is easy if you are prepared. The days of dealers being lazy and entitled are over. The housing boom is over but for every house that went into foreclosure on the way down - there is a new home owner looking for a batch of HDTVs when they move into the house they just bought from the bank. The question is: will the specialty AV dealer be able to show them enough value to make it actually worth spending more money. I think they can.

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