On the heels of U.S. consumer electronics (CE) store Best Buy announcing the closure of 42 of its stores, market research firm Canalys predicts that many more consumer electronics retailers will follow in the footsteps of Surcouf, Best Buy Europe, CompUSA and Circuit City and disappear both in Europe and the United States.
The firm describes this as a result of the ‘strategic failure’ of the CE retailing model and warns retail chains in other segments to learn quickly from the mistakes of the fallen.
“They were hit by a perfect storm of competition from the Internet and supermarkets. They lost too much business to competitors undercutting them on price and failed to respond to the many attractions of Amazon’s online approach, such as its vast stock ranges, peer reviews, recommendations, free delivery and excellent returns services,“ said Canalys CEO, Steve Brazier.
“Today’s consumers are even willing to browse for a book in a local store then order it from Amazon at a higher price simply because they want Amazon to understand their entire library, to optimize future recommendations. This is more than “showrooming” – this signals a fundamental shift in consumer perception of value.“
The firm describes this as a result of the ‘strategic failure’ of the CE retailing model and warns retail chains in other segments to learn quickly from the mistakes of the fallen.
“They were hit by a perfect storm of competition from the Internet and supermarkets. They lost too much business to competitors undercutting them on price and failed to respond to the many attractions of Amazon’s online approach, such as its vast stock ranges, peer reviews, recommendations, free delivery and excellent returns services,“ said Canalys CEO, Steve Brazier.
“Today’s consumers are even willing to browse for a book in a local store then order it from Amazon at a higher price simply because they want Amazon to understand their entire library, to optimize future recommendations. This is more than “showrooming” – this signals a fundamental shift in consumer perception of value.“
Canalys predicts that, by 2020, many city centers will look quite different from today, with many famous retailers disappearing.
“People will seek retail premises out for a number of reasons: for experiences centered around entertainment, relaxation and education; for events, such as celebrity appearances, performances and signings; for socialization and sustenance; and where brand exclusivity or the nature of specialization or service required cannot be met by online alternatives,“ added Alastair Edwards, Canalys Principal Analyst.
“A great innovator may find a way to build a next-generation outlet that can shift CE goods while offering some of these experiences, but it is more likely that the majority of CE retail chains in mature markets will simply disappear within the next five years.“
“People will seek retail premises out for a number of reasons: for experiences centered around entertainment, relaxation and education; for events, such as celebrity appearances, performances and signings; for socialization and sustenance; and where brand exclusivity or the nature of specialization or service required cannot be met by online alternatives,“ added Alastair Edwards, Canalys Principal Analyst.
“A great innovator may find a way to build a next-generation outlet that can shift CE goods while offering some of these experiences, but it is more likely that the majority of CE retail chains in mature markets will simply disappear within the next five years.“
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