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March 2011 editorial

Walmart stores reduce space for consumer electronics components

Author: Lucio Cadeddu - TNT Italy

[A Walmart store]
A Walmart store

We can't call this really breaking news because it has been published on Bloomberg two months ago already but I think it still deserves some comment. Briefly, the guys at Walmart have deciced to reduce space for electronics in their stores. And this includes both audio and video components!

I'm sure it is not necessary to remind you what Walmart is but let me briefly summarize: Walmart Stores Inc. is an American public multinational corporation that runs many chains of large discount department stores and warehouse stores. This company was the world's largest public corporation in 2010 by revenue. Thier motto is Save money, live better! Being the giant it is, when it moves it behaves following precise steps. The reason why Walmart stores will reduce space for consumer electronics is because there has been a significative loss of sales in that department.
A similar phenomenon has been reported by Best Buy Co. as well, another huge electronics retailer. Online sales seem to be the real culprit for this loss of physical sales. Among others, Amazon - cited in that Bloomberg article - has certainly played its role here.

People tend to buy electronic components directly online and even large TVs make no exception! Choosing a TV, generally, was made by means of a direct comparison of several models, one next to the other, inside a physical store. This attitude is changing. People are starting to trust online reviews or comments from other buyers so a direct comparison seems less necessary than before.

Another reason that seems to justify the loss of interest in consumer electronics - from a seller's perspective - is that profit margins are extremely narrow in audio and video (not so in high-end, but that's another horror movie :-)). Clearly, online stores can sell at highly discounted prices so those narrow margins become even less attractive if one has to face with aggressive online competitors and/or Companies that even sell DIRECTLY to their customers.
Don't forget that purchasing on a physical store might also be a highly time-consuming procedure, especially if you have to visit more than one store for a careful prices comparison. These things can be done within minutes on the Internet, as there are websites that compare prices and offers for you, automatically.
Moreover, understanding the quality of an electronic component can be very difficult for the average customer and for this reason he tends to trust other people's (albeit unknown!) opinions and experiences.

Personally, I'm not suprised by this phenomenon, as I've been purchasing everything online for years. Actually, most of the things I've bought have been choosen and purchased online: records, books, DVDs, bikes and bike accessories, cars (!!!) and car accessories/spare parts and, recently, even a 26" HD LCD TV for my daughter, since that kind of screen seemed impossible to find on traditional stores (only 29" or wider). I've taken my risks, of course, but the balance of all these years "online" is extremely positive. Purchasing online let me save a huge amount of time, time that I've invested in listening to more Music, reading more books or spending more quality time with my family and friends.

Are there any shortcomings? Of course there are! An increase of online sales means traditional stores will slowly disappear, sooner or later, at least for certain categories of goods. What's happening inside our small HiFi niche? More or less the same phenomenon can be observed: physical stores are becoming rare, be it because the number of audiophiles is shrinking or because of this increase of online sales.

Now, can you really choose any HiFi component directly online, without adequate listening? Maybe not, and for this reason many Companies and stores are starting to use the test before you buy selling strategy. You can test a component for, say, a week inside your system/room and then decide to purchase it or ship it back to the seller. This method beats traditional listening inside a physical store hands down. What sounds good inside the store demo room can become unbearable at home, I'm sure you have experienced this strange fact at least once in your lifetime :-)

Summarizing, we're facing a revolution and there's nothing we can do about it: either we adapt our habits to these new trends or we're doomed to...extinction. In the meanwhile enjoy this sweet, acoustic version of Point of extinction by Motion City Soundtrack.

© Copyright 2011 Lucio Cadeddu - direttore@tnt-audio.com - www.tnt-audio.com

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