Over the past few years the growing popularity of high definition television equipment- flat screen HDTV displays in particular- has prompted a lot of retailers who previously hadn't carried electronics, or who had only carried a limited selection of electronics, to sell a much greater variety and quantity of high end electronics. The result of this has been a glut of flat screen high definition TV's on the market and an extreme level of competition among all of the various retailers to gain a decent market share. This competition and the glut of devices on the market has led retailers to lower prices to the point where they have trouble showing a profit. In fact the situation for retailers has gotten so bad that Circuit City recently posted a loss. All of this isn't surprising with companies like Wal-Mart and Home Depot trying to get in on the action and selling TV's themselves.
Now, some of the traditional consumer electronics retailers are fighting back by providing special installation and service departments for HDTV equipment. These services- like Best Buy's Magnolia Home Theater store- essentially take advantage of the fact that high definition television is a complex subject that many people don't know much about. This lack of knowledge encompasses everything about HDTV. Many people don't know exactly what High Definition is, they don't know where to get programming, they don't know how to install the equipment, and they don't even know how to pick out an HDTV set. What most consumers do know is that high def is a trendy and attractive technology, and that they want it. These "stores within stores" capitalize on the attraction of high def technology by offering to fill in both the gaps in knowledge about the technology and consumers' ability to install it in their homes.
Among the services that these stores offer is advice about how to pick out an HDTV set. This can be especially confusing for a lot of people because there are so many types of high definition television sets. Where twenty years ago you could pick out a cathode ray tube TV set, now you can get a DLP projection screen set, an LCD projection screen set, an LCD flat panel display, a Plasma screen display, or even a projector that uses DLP technology. All of these choices can be pretty staggering to the average consumer. Especially when they realize that which kind of technology they choose will seriously impact the quality of their viewing experience depending on what exactly the intend to watch, where they intend to watch it, and what kind of light conditions exist where they intend to watch it.
These services promise to make money in two separate ways. The first is that they will lure consumers into the stores who are willing to pay higher prices in order to get the extra advice about what they're going to buy. These consumers realize that paying a few hundred dollars more up front will save them money in the long run if it prevents them from making the costly mistake of buying the wrong equipment for their needs. The second way that these services make money is by actually installing the HDTV equipment in people's homes.
While the discount stores still offer lower prices for anyone able to educate themselves about all of this technology, the added services offered by traditional electronics retailers create a win-win situation for themselves and the customers that rely on them.
Posted by larry dixon at 15:20:00. Filed under: General