How is the Price of Gas Affecting Your Business?

On our sister Website at http://www.marketnews.ca/, Lee Distad looked at the price of gas and how it's affecting the custom installation business; and gave some tips on how to help your business save money. Installation staff and salespersons are most certainly feeling the heat, since they're quite often on the road visiting clients. But there are other areas of the CE business that's feeling the gas gouge just as hard, if not harder.

Sales representatives are the first people that come to mind, many of whom work independently, and spend a huge chunk of their time driving from store to store. At my last fill-up in Toronto, gas was more than $1.30/litre! This has to put a dent in their wallets, not to mention cause their visits to become few and far between. Can this lead to strained relationships with dealers? After all, if Bob the Sales Rep used to visit every week, and now all of a sudden he's only in once a month, can this be wrongfully interpreted?

Then we get to delivery guys. Can retailers, especially small independents, continue to offer free delivery services to customers when the price of gas keeps inching higher and higher? Where will these extra costs be placed? On the price of the product itself? Or will retailers simply have to "eat" the extra few bucks per delivery? It might not sound like a lot, but it adds up.

That leads to the manufacturers/distributors who often ship products through third-party courier services. Are they charging additional transport fees to the retailers? Will couriers increase prices to offset the growing numbers at the pump?

As you can see, the rising price of gas affects more than just the consumer. So if you're buying a big ticket item and have to pay for delivery when you never had to before, don't blame the retailer, at least not during these trying times. And if you don't have to pay, appreciate that offering even more now. As for retailers, if your sales rep is skimping on visits as of late, it probably has nothing to do with your relationship, or your importance as a business partner.

Let's hope that pricing comes down to a reasonable level soon. Thankfully, it's summer in Canada, so we're bound to see more and more bicycles and roller blades on the streets anyway. And with the current price of gas, we might see more of these alternative means of transportation than ever these days!

DVD Player Free with Cable Purchase?

I just received an e-mail from a CE industry member with the following subject line: the state of the consumer electronics business. The message read as follows:

Our business has certainly changed. “free hardware” if you buy a “hook up cable”?
I am reading an ad from [retailer name withheld]
FREE- [brand name withheld] 1080p upconverting DVD player when you purchase a [brand name withheld] HDMI Cable 1080p cable for $149.
I am wondering how long it will be before the ads read “FREE 46” LCD’s” just to sell a hookup cable

Wow. There's a powerful message! I am absolutely stunned if this really is a valid promotion. It's no secret that retailers make more money on accessories than they do on big-ticket items, like computers or flat-panel TVs. Regardless, the PC and flat-panel TV still remain the central piece of hardware within a home theatre or computing system. To offer something like a DVD player for free when you buy the cable that connects it is just crazy! Sure, DVD players are available for $50 these days. But that still doesn't explain how we've come to a point where retailers are pushing the sale of the cables more so than the major hardware. Aren't we supposed to be working on upselling the customer to the cable with his big-ticket purchase?

What does this all mean? Has the focus completely shifted to making a sale (and profit) in-the-moment rather than building a relationship with the customer, meeting his needs, and providing an experience that will make him want to return? I'd be lying if I didn't say that I love a good deal whenever I can get my hands on one. But such a promotion simply makes the DVD player look like an unimportant part of the home theatre equation when, in fact, it's an integral part. Maybe there's more to this than meets the eye. Perhaps this is a sign that Blu-ray has already taken over. It must have if "regular" upconverting players are now practically being given away.

Note: I purposely removed the retailer and brand names from the original e-mail copy simply because I didn't think they were needed in order to illustrate the point.

Lowe's Brings More Competition to Canadian Retail Sector

Lowe's official entrance into the Canadian market today spells more competition for the Canadian retail sector: not only in the home improvement category, but also with products like appliances, for which many CE and big box stores are involved.

Three stores opened today in Brampton, Hamilton, and Brantford, ON; and there are plans to open a Toronto store in late January. Lowe's says it hopes to open 100 stores in Canada in the near future.

In an effort to up the ante when it comes to customer service, Lowe's Canada plans to do things like open additional cash registers the instant there are more than three people in line, says National Post. If you happen to have caught one of the retailer's latest TV commercials, you'll also see that it plans to position "call" buttons throughout the store. Press one, and a salesperson will immediately come to your rescue. (Yah right - I'll believe it when I see it!) Other efforts Lowe's is undertaking in order to entice customers include having more employees on the floor, and having more products and special order items.

Lowe's not only poses additional competition to big box, home improvement, and appliance retailers. But because the company also offers installation services, custom A/V specialists might find themselves crossing paths with a Lowe's installer every now and then.

The important thing to note is that, even though Lowe's isn't specifically in the consumer electronics marketplace, the retailer will pose new competition for the consumer's disposable bucks. Am I going to buy and install a new plasma TV, or get that kitchen renovation I've been dying for? Not to mention that, should the retailer follow through with its customer service promises, there will be a new level of shopping satisfaction to live up to.

Meanwhile, direct competitors like Home Depot are likely revising strategies to more effectively compete against this new entrant in the Canadian market.

Canadian Retailers, Manufacturers Continue to Drop Prices

By now, you're probably tired of reading story after story about the Canadian/U.S. dollar, but after weeding through my inbox this morning, I couldn't help but report on the topic.

Retailers like Sears, Wal-Mart, and Future Shop, have all made announcements that they have reduced prices in wake of the Canadian dollar. Wal-Mart is running radio commercials that discuss the rising Canadian dollar and the subsequent reduced store prices. Sears Canada even has a name for its marketing strategy: Stronger Dollar - Lower Prices.

I've done some comparisons myself, and I can attest to the fact that it isn't all B-S: some of the prices have indeed been cut such that they are in line with what the same product is selling for in the U.S. However, I can understand how consumers could be skeptical, judging each move as a mere marketing ploy.

My advice: do your research. With the existence of the Internet, it's pretty darned easy to see if a product is in fact being offered at the same value in Canada then it is in the U.S. Also, even if the price is a bit higher in Canada, don't automatically assume that you're getting hosed. Read the fine print to find out if there are added incentives to the purchase. Is there a longer warranty? Olympus Canada, for instance, just announced that it would be adding an extended warranty to the purchase of any of its digital SLRs (and lenses) in Canada at no additional charge. In fact, this announcement was made in conjunction with the company's announcement that it would be dropping Canadian prices! Another question to ask: are there favourable delivery options that would make purchasing in Canada a better deal? Sears Canada just announced that it would be offering free shipping on soft goods to any location in Canada. The bottom line: dig deeper before making a rash judgment call.

Meanwhile, retailers aren't the only ones taking steps to slash prices. When it comes to discrepancies in pricing between Canada and the U.S., digital cameras are one category of product that often experiences an unusually wide gap. Two manufacturers, Nikon and Olympus, have already made announcements that they would drop prices in Canada. Although Nikon said it could not offer price parity, the company said that the lower prices would still be "competitive". (Keep in mind, however, that, when it comes to the manufacturers, they are reducing their own suggested retail pricing: the actual sale price you'd see in the store is ultimately up to the retailers).

As for the Canadian dollar, it remains relatively on par with the U.S.: at last check, it was worth $0.99 U.S.