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Internet Tweeter to Shutter 49 Stores
Brandon Hill (Blog) - March 26, 2007 11:07 AM
Print E-mail del.icio.us 37 comment(s) - last by kyleb2112.. on Mar 27 at 9:58 PM
Tweeter feels the pinch from larger retailers

Tweeter is an audio/video retailer that opened its first store in 1972. They started off in the New England area and have since spread nationwide offering 153 retail locations. That number will soon drop by one-third with the announcement that 49 stores and two regional facilities will be closed.

The company will close all of its stores in Alabama, California, New York and Tennessee and will reduce its store count in the remaining states that it has a presence in. As a result of the closings, 650 of its 3,100 employees will lose their jobs. The cutbacks will reduce Tweeter's annual revenue from $735 million USD to $556 million USD while the store closings will result in a charge of $50 - $60 million USD.

"As we continue to face the challenges of our ever-changing industry, we do so with a renewed focus on the future of our brand and on our ability to deliver the ultimate consumer electronics shopping experience," said Tweeter CEO Joe McGuire.

The remaining stores will feature Consumer Electronics Playgrounds to better compete with its retail competition. "Since our Playground stores are clearly resonating with consumers and articulate our vision so well, we will continue to execute this concept in our remaining 97 traditional stores by taking what we have learned from our current Playground stores and rolling it into our existing fleet," McGuire continued.

Many analysts believe that Tweeter has just not been competitive on pricing compared to its larger rivals -- especially when it comes to popular HDTVs. Stores like Wal-Mart, Circuit City and Best Buy have been slashing prices on their televisions while Tweeter has held prices closer to the MSRP.

"This holiday season was so brutal, with everyone from Wal-Mart to Best Buy to Costco really, really aggressively discounting their TVs," said Eric Haruki of IDC Technology. "It was really no surprise... They do offer high-end stuff, but these guys are completely non-flexible with their price points."

You can consult the following press release for the full list of store closings.

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Price Points
By BMFPitt on 3/26/2007 11:24:33 AM , Rating: 2
Definitely has a point here. When I bought my TV, I found Tweeter was a great place to browse and see how TVs look, but then buy online for 20% less. While I'd like to support it as a great store, I'm not going to for that kind of markup.




RE: Price Points
By gramboh on 3/26/2007 11:35:55 AM , Rating: 2
This is a problem many retailers are facing in various industries.

I'm a big alpine skier and for the last few seasons I've been buying equipment online. Personally, I try to avoid going into shops to browse the gear/ask questions and then buy it online as I feel it's somewhat wrong. I usually know enough about what I want to buy it on my own. However I did make sure a pair of goggles would fit with my helmet and then bought them on eBay (price in store $130CDN, price on eBay $65US + $15US shipping). Ski shop owners are aware of this happening and react angrily, when in fact they should be figuring out how to compete (on service).

If this trend continues to the general population, I wonder if in the future retailers will require you to put some kind of deposit down before trying out all their goods. Running a brick & mortar that sells goods easily purchasble online is risky, you have so much overhead (rent, salaries, carrying costs, inventory writedowns etc) that online outfits don't have to deal with (to the same extent anyway).


RE: Price Points
By Noya on 3/26/2007 11:40:03 AM , Rating: 2
The only times I've ever bought from Tweeter was on closeout items. No one in their right mind is going to fork out 20-30% more, even if the sales experience is better.


RE: Price Points
By TheDoc9 on 3/26/07, Rating: -1
RE: Price Points
By drebo on 3/26/2007 12:39:07 PM , Rating: 2
Man I wish I'd waited until after you posted before I posted so I could rate you down.

The embodiment of ignorance here, folks.


RE: Price Points
By Chadder007 on 3/26/07, Rating: 0
RE: Price Points
By TwistyKat on 3/26/2007 3:23:30 PM , Rating: 2
No, B&M establishments have much high fixed costs to deal with.

Running an online retail site can be much cheaper.

I'm worried about the long-term inpact to local economies when these B&M shops all start closing up and with them go local tax revenues and entry-level and mid-level jobs.

Maybe it will be a good thing in the end, but I can't see how.


RE: Price Points
By FITCamaro on 3/26/2007 4:01:42 PM , Rating: 3
Dude. There's a difference between being greedy and trying to stay in business. Smaller chains must charge higher prices because they don't have the revenue of larger ones. And online stores have no overhead other than customer support and a place to keep stock.

I have no problem with the service at most chains(of course I don't really require it usually) but I buy a majority of things online for the lower price. Actual stores will never be able to compete on price with large online marketplaces all the time. Places like Walmart have cheap prices because they sell cheaper crap even if the brand and model is the same. Of course even if they sold ultra high end stuff I wouldn't shop there.

Yes, as online shopping becomes more prevalent, smaller chains are going to have problems. Larger ones will have less of a problem because the majority of people like to be able to take stuff back to the store in case of a problem. I'm like this myself. Yes I can buy a TV cheaper online. But if there's an issue, you either have to have an in-home service plan purchased from the online retailer who's service is questionable or ship it back to them which will cost a fortune. I'd rather pay an extra $50-100 and be able to bring it back to the store if inside my return policy or (since I buy the warranties) have an in-home service that if they give bad service I can go back to the store and bitch at them, not someone on the phone.

Computer parts and other smaller items I'll always buy online. Larger items I'll stick to the stores for. You can get really good deals if you watch the sales. When I bought my HDTV, Best Buy had it for $600 off, I paid no tax due to a tax free holiday, and I got the warranty for half the stated price due to the $600 off. Then a week later, I got another $100 off since Circuit City had it on sale and Best Buy will price match 110% of the difference for 30 days. So I got a $1600 TV for $900 in the end. Even now 5 months later it's still $1000 or more at stores.


RE: Price Points
By drebo on 3/26/2007 12:37:21 PM , Rating: 2
Expecting Brick and Mortar companies to compete with online retailers is delusional at best. Overhead costs for a brick and mortar are so incredibly much higher than for a click and mortar, there is simply no way they can sell for the razor-thin margins that online retailers sell for.

You're partially right in saying that brick and mortars need to up the service to compete, but you're forgetting that simply being there is a service to you. If you could ONLY purchase online, how would you ever demo anything? How would you know which TVs look better than the others? You wouldn't. You'd be shopping blind. Thankfully, that's not the case. Thankfully, we have the brick and mortars where we can go and try stuff out.

Is convinience not enough of a service for you? Is a knowledgeble sales staff not enough of a service for you? Is the fact that you can go and preview whatever it is you're buying not enough of a service for you? That's what you call a value-added resource. The fact that you can go talk to a person about particular specs and performance of a particular piece of hardware or software or counter top or throw pillow or carpeting or panel siding or paint is a service in and of itself. These services cost the company money to provide. How else do you expect them to pay for it without building the cost into the item?

Honestly, the more people who do exactly what you do, the worse off it is. What happens when all of your local electronics stores go out of business? Where will you go to demo TVs? Computers? Where will you go to match particular paint colors, or swatches of sofa fabric or curtains? Monitor color reproduction is good, but is no substitute for the real thing.

Think about it for a little while. You'll see why these places are important and why they have to charge more than an online shop, even without providing any "extra services."


RE: Price Points
By BMFPitt on 3/26/2007 2:14:49 PM , Rating: 2
True enough, but when doing so can save you a few hundred bucks, it's hard to buy from the store you're demoing at just because it's the "right thing to do." And I really don't see how they can get around this problem. They're kind of stuck with the "need it NOW" crowd, and the "money to burn" crowd as their main revenue streams.


RE: Price Points
By theapparition on 3/26/2007 2:41:49 PM , Rating: 2
Let me say that I love Brick and Mortar stores. But times have changed and many have not kept up. Tweeter is a perfect example. They have a lot of great products, and higher end gear which is impossible to find at your local BB or CC. They are also online, so technically, they are a click and mortar, as well.
Problem is, sales support is becoming less of an advantage. With the information and product reviews posted on the internet, it is easy to get recommendations on the products your interested in. Local sales also tend to be biased to sell what they have, and many people get turned off by the hard sell.
I've been at the local Tweeter many times, all with intention to by. I always give local retailers the option to match price. Something Tweeter has refused to do. The problem is, I'm not asking to match a price from some discount internet house, I'm asking them to pricematch what is available at the CC or BB next door.

I hesitate to mention this (because it infuriates me) but maybe they need to offer diffent online vs retail store prices which becoming the norm now. For instance, I just picked up a 250GB hard drive at CC. $39 (after rebates) if I bought online and picked up at the store, $109 (after rebate) if I just bought it at the store. I hate that, but I guess it works for the industry.


RE: Price Points
By gramboh on 3/26/2007 3:02:19 PM , Rating: 2
It didn't come across clearly in my post but I agree with what you are saying. I'm wondering how brick and mortar retailers can prevent this type of activity (demo product/buy online). In reference to my example of skiing/biking, they can compete on servicing the equipment and selling apparel which people are more likely to want to see in person. With electronics, there isn't the same type of routine maintenance required so it's hard to compete on that front.

If the problem becomes widespraed enough for retailers, I wonder if they will start charging membership fees like Costco.

They can't blame the consumer for doing the 'wrong thing' because it's very hard for people to pass up the chance to save a few hundred bucks.


RE: Price Points
By Oregonian2 on 3/26/2007 3:44:44 PM , Rating: 2
Except the membership fees aren't "real" at Costco. Our 2% rebate from them is more than the membership fee. They PAY us to shop there. How's that for a concept. :-)

But really, it's being able to bring things back. The return policy in addition to being able to see things up front that makes a B&M more valuable. As well as not having to pay shipping and getting it "NOW". True, here in Oregon, there's no sales tax so that gives B&M's more advantage here than in most states.


RE: Price Points
By abhaxus on 3/27/2007 5:46:36 AM , Rating: 2
As a salesman at a local retail electronics chain, of similar product assortment to tweeter, I can say what I do to combat the demo in store, buy online problem:

Don't give model numbers to the customer. After a long sale discussion, when I can see that the customer is clearly ready to buy but then says they'd like my card "and could you please write the models down for me?" I always respond politely with "Thanks for asking for my card, but I'm sorry I can't give prices and models out anymore." Some people get very angry, but those are mostly the people that are doing something wrong.


RE: Price Points
By Moishe on 3/27/2007 9:22:31 AM , Rating: 2
What you're saying is that the consumer is at your mercy. I know it must suck to demo something and then have the customer go somewhere else, but when I am that consumer, I just leave. It simply enforces the fact that I shouldn't buy from you. I'm sympathetic for the salesperson and I usually ask if they make commission, but I am also very interested in finding other reviews about the product. Many of the salespeople at the B&Ms are useless. They make up stuff to sound informed or they they just say "I don't know". The best research is online. When someone won't allow me to make an informed purchase decision, it guarantees that I will not spend a dime on them.

I understand the dilemma, the salesperson is out for a paycheck, and I am out to save money. You would attempt to prevent me from doing proper research just so that I don't buy the produce elsewhere. I'm frugal and wise with my money and I won't buy blindly. The biggest effect the internet has for me is the availability of good information. I no longer am required to find some informed salesperson (rare) and I can go get the info I need to make the purchase I want, with MY money. Too bad if you get left out. That's not my problem. I regularly pay extra to ensure that I get quality service. The difference now is that instead of 2 places in town to choose form, I have dozens. If I could go to Tweeters and pay 2-10% more and get knowledgeable salespeople and a wide selection of products, I certainly would. Instead I get a limited selection, salespeople who are idiots, and prices that far, far exceed any other retailer. Who is to blame her? The consumer? Hell no.


RE: Price Points
By abhaxus on 3/27/2007 4:34:29 PM , Rating: 2
Well, I am one of the rare salespeople that does know what they are talking about. You are right, if I was an idiot, I wouldn't be able to pull it off. Very rarely do I run into customers that try to talk to me then go elsewhere to buy, partly because my retailer is known for their competitive pricing, and partly because I'm pretty good at what I do.

I also only employ the no-models strategy when I can tell someone is trying to scam me. If you've ever been in sales, you can tell that someone is about to go buy somewhere else. Usually the service I provide is enough to keep people in the store, and if they seem like they will buy from me and legitimately have to go home and think it over, I will write out a whole price quote for them. I'll even tell them where to find reviews online and what kinds of sites to trust. But they usually end up coming back. It's just the select few that you can TELL are going to be a dick and after wasting 30minutes of your time and knowledge are going to buy a TV for 10% cheaper online from a no-name internet retailer.

They also often have the gall to come in after they buy elsewhere and ask me questions about why their setup doesn't look or sound right (sometimes disguised as looking at another category of product, like audio or a dvd player), because they knew I was pretty good at what I do.

Think of it like a waiter at a restaurant. If you go to a Chili's you do not expect the same level of service you get at a Bonefish Grill (couldn't think of another high-end chain at the moment, went there last night :) ). Most people tip a higher percentage at a nice restaurant than at a normal one, because the service really is better. Doesn't matter that the tip would be higher because the food is more expensive.


TV prices slashed
By Webgod on 3/26/2007 11:38:15 AM , Rating: 2
Most of the LCD TV price slashing has been on off brands. People don't seem to appreciate getting a TV with no dead pixels, or one that has advanced deinterlacing, or a solid remote, or a nice menu. Of course I'm an electronics nut, but I can't believe those features aren't selling better TV's. I guess people just see "32-inch Flat TV, $599" and go "Wow I'm buyin' it while I can" without even looking at the brand, or comparing anything.

Sure, LCD panels have dropped in price enabling manufacturers to make cheaper TV's. But I'm fairly troubled by this race to the bottom where stores go "I'll make little to no profit on this and make the profit on that" or "I'll make little to no profit on this just to get people in the door". Sure, it's a strategy, but obviously with retail stores closing it's having an impact on the US economy. It's a strategy Dell does with sales, and rebates, and coupons, and Wal-Mart does with some occasional big sales, but it poisons the mindset of the consumer. You have people going, "Why buy your [product] for $899 when [company] advertises a [product] for $599"? When you tell them all they hear is $300.




RE: TV prices slashed
By Noya on 3/26/2007 11:47:52 AM , Rating: 2
I'm with you, willing to spend a little more for higher quality, but for 99% of consumers it comes down to the mighty dollar.

If they even compare say, an Aquos/Panasonic/Sony with Olevia/Insignia/etc., they look at it this, "We get 90% of the performance for 60% of the price."


RE: TV prices slashed
By Zirconium on 3/26/2007 12:39:53 PM , Rating: 1
quote:
If they even compare say, an Aquos/Panasonic/Sony with Olevia/Insignia/etc., they look at it this, "We get 90% of the performance for 60% of the price."
Not just that, but many don't even notice the difference in performance when the TV is side by side. Sometimes, the stores don't do a good job of hooking up the TVs, and some displays end up with a poor quality picture because of the hookup, rather than the set. With all of this aside, most people are satisfied with no-name brands provided they don't break. When you take the TV home and you aren't comparing it to other TVs, pretty much any flat panel will look good.

From my experience with Tweeter, I am glad that they are closing a lot of shops. The first time I went in was a couple of years ago, and I saw ghosting on one of the TVs. I pointed it out to a sales associate, asking when he thinks LCDs will not have ghosting any more. He replied that the LCDs didn't have ghosting, even though I just saw it with my own two eyes.

The second time I went in I was trying to buy a receiver. They of course went straight to the receivers at the upper end of my budget, and when I asked to see the cheaper ones, they immediately started saying how it was lower quality, etc. While I could hear a difference between the cheaper and more expensive, I really couldn't say that I preferred the sound of one to the other. However, the two associates who were helping me insisted that the more expensive one was better and I should get i