The view from over here / The audiophile retail world through the Stereonow window #1

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This is the first in an occasional series on the world as seen through the eyes of this audiophile retailer. Not through the eyes of every retailer, just this one – Stereonow.

I can’t nor indeed would not presume to talk on behalf of other retailers and certainly this text is not a plea for sympathy or indeed anything like that. It’s a response to a number of questions from interested parties, by which I mean ‘civilians’ i.e. potential customers and hopeful suppliers.

Setting the scene aka "He can’t be serious – can he?"

To set the scene, a number of customers, having spent a morning or afternoon have concluded that Stereonow is something akin to a hobby for me. By this it seems they mean that music in the home is still a passion for me, coupled with a childlike (yes, it’s true) fascination with the equipment – or put differently, even though I'm running a business (success being measured by equal quantities of customer satisfaction, and profit) spending time here doesn’t feel like being under the gaze of a typical / traditional audiophile retailer.

Actually, I'm delighted when people tell me this because that’s precisely the atmosphere I set out to create and that, by and large, I’ve been able to maintain.

Anyway, that's the introduction over with. I'm not going to discuss here how I came to select LFD (my only amplification) nor Harbeth (the only stand mounted speakers I represent) nor North Star (the only digital equipment I demonstrate) nor Funk – the only vinyl replay system I demonstrate. Quite the reverse in fact.

I'm going to explain why I don’t take on other suppliers – currently.

Okay, why?

The primary reason – today – and might well change when there is an upturn in the economy, is uncomplicated, and it’s this.

The market (or 'pie' if you prefer) is currently finite. According to some observers, the audiophile ‘pie’ is shrinking. I’ve no idea if the latter is true and I guess that without verifiable figures, no one knows for sure. It certainly isn’t expanding though.

So take the situation of PS Audio for example. I'm was until  resigned a major specialist retailer for them. Let’s say that per quarter I spent £x trade with them at y% margin. If another supplier of mains cleaning equipment (I'm putting to one side for a moment the fact that PS Audio had the mains regeneration market pretty much to themselves) comes along, then if I take them on, the amount I spend with PS Audio diminishes. It must do. No doubt about it.

That quarterly figure of £x will be diluted by the impact of the other company.

Margin variation, in reality has very little impact.

If I do this then I'm no better off. My loyal supplier of PS Audio (Signature Systems) is worse off and only the new supplier is better off. Even a novice can see that it’s not in my interest to take on another supplier. It might – just might be worth it if and only if the new supplier could guarantee they could expand my percentage of the overall ‘pie’ for power cleansing equipment in the UK. but they can’t.

Clueless!

Moreover makers in general haven’t got the first clue as to how to do this. Certainly they can spout the text-book phrases about ‘increasing brand awareness’ and so on. But when it comes to it, they don’t know how. Some of the more arrogant ones and a few of the more realistic ones feel that in any event it’s down to the dealer to raise the brand.

Actually, in part, I agree with them.

At the very least the responsibility for raising that awareness must be divided fairly between the distributor and the retailer. The point is though that most distributors in my experience are utterly clueless when it comes to the practical realities. Sadly they confuse advertising spend with marketing skill. But – that’s moving off the topic a bit.

So returning to today's market, given that the ‘pie’ remains static at best (ah yes, that’s me in a fortunate position for once) and declining for many others, I’d have to be nuts, and my advisors would have to be nuts to take on another line to compete with my current ones – irrespective of how good these other products might be.

Not much good for the public though is it?

Well, at face value, no. Not really. Or is it? Let’s take a sideways glance. First, by not over-reaching myself, I'm more likely to remain in business during the downturn – to the benefit of everyone concerned. My suppliers get paid, I put bread on the family table (a bit melodramatic I know, but I’ve been itching to use that phrase for years) and my customers can be confident that I'm still around rather than being cast in the warranty wasteland that they might otherwise find themselves in.

Err, might it be a good thing then?

Possibly. Now I don’t want to seem like a trend setter and I certainly don’t see myself as one – however one evolutionary path that might be taken is of more retailers who stock far fewer brands, but each of those in depth – like Stereonow does.

It’s already happening in the photography business. I know of one Nikon-only retailer and few Leica-only ones too. It happens all the time with cars. You don’t see an Audi franchised retailer with Alfas lying around (probably broken if my experience is anything to go by) on the forecourt do you? So 'civilians' just might see a benefit emerging from the downturn.

A smaller number of smaller retailers tightly focused on a few brands – and as a consequence offering a standard of service via a far greater in-depth product knowledge to the public. For me, that’s a most encouraging thought and no, this doesn’t mean I'm expanding nor franchising out my know how. Stereonow is staying small, and content – which means that I'm most unlikely to take on any additional suppliers in the foreseeable future.

In this ‘retailer’ series, under consideration:
  • Are some high-profile retailers as independent as they make out, or are they covertly owned by their suppliers?
  • The thorny issue of product reliability where the retailer goes into battle for his customer, against his supplier.
  • How naive but well-intentioned makers can get a knee in the groin from unscrupulous stockists who have no intention of selling that hapless supplier’s equipment.
  • How the shrewd supplier can manipulate and then compromise a retailer's supposed freedom of direction.
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