Buying speakers from big box stores

[Gimpy Ric]

Also, you aren't going to get any help from a knowledgable sales staff. I mean, the guy helping you is probably a high school kid working their part time for lunch money.

p

ROFLMAO

 

[Soundman]

Spoken like a true ID fanboy there.

Well, I didn't mean to sound like an ID fanboy. ID's are not the only good values in the industry. There are plenty of great reputable places to find great deals on good audia gear. I just don't think the big box retailers fall into that category. That's all I meant.

 

[darien87]

I'll put in my 2 cents.

I'm lucky enough to live in an area where I have a Best Buy and a stand-alone Magnolia right across the street from each other. I usually go to Magnolia first, because they carry superior products and have much more knowledge than your usual box store.

But every once in a while you can get a good deal at Best Buy. Like I got with my TV, a 52" Samsung LCD for $1,750. Plus I've got 2 years interest free financing with my Best Buy card. So I'd say the big box stores are fine, when you can get a deal. But if you don't mind ordering online, you can use the box stores to do your research and demo'ing, then go and buy it online.

I find that the guy's at Magnolia are pretty good at dealing. I can usually get them to drop their price a couple of hundred bucks. They usually won't come down to internet pricing, but they'll get pretty close. Plus you can go there and pick up demo stuff at pretty good prices. I recently had to drag myself out of Magnolia, to stop my self from buying a demo 200 watt, 7-channel BK amp, for $1,200.

 

[gus6464]

It really all depends where you go. You can go to a smaller dedicated shop and can be treated like crap, then go to a bigger store like some BB with magnolia, or home theater store and have a wonderful experience. Some just want your business right then and there and others actually want you to come back. I've been to stores where they treat you like a king even though you are just looking to spend $500 and others where they just look at you like you are just some poor bastard.

 

[mudrummer99]

3db, no worries, I know you were just generalizing, every business has better employees and worse ones

I also understand that it takes a long time to learn the high end electronics game and 2 weeks isn't enough, but the people that are magnolia sales reps are usually people that have been with the company for years and already have a good broadbase knowledge and the extra training is more or less on the specific merchandise that magnolia stores carry over the regular BB stores. That doesn't mean that every magnolia employee is a rockin' knowledge base or even easy to deal with, but you have a higher chance with them. And being a recent college graduate, I'm extremely sensitive to the price to quality ratio. Even having worked at BB, I would go elsewhere to purchase if i could get a better deal.

Mike

 

[adwilk]

Just a preface, I am a BB employee and have worked there quite a bit in the past, so take this as you like. At a lot of BB stores, sales people are woefully under trained. Especially around holiday season since mostly what the retailer wants are warm bodies to corral the crowds. Magnolia is a different story. The amount of training those guys go through is pretty intense. When our store got it, the people that were being moved up to it went away on a 2 week, 10 hour a day training session and came back knowing things that I am just now starting to learn. As far as markup goes, yes, it's pretty ridiculous, but take into account that the reason stores such as BB and CC stay open is the margin in the HT department, without that these stores wouldn't exist at all. Computers, media, appliances and all that stuff are very nearly no profit whatsoever. I think that's all I have to say about that. Thanks for reading my devil's advocate spiel for the day.

Mike

No offense, but you drank the same koolaid that they force down the throats of the majority of their customers. These items arent any more marked up than other dealers. If any thing, a lot of the avg price sold for say the Klipsch RF62 will be less than a boutique shop. These stores DO NOT STAY OPEN due to their HT margins. They stay open due to bulk buying and margins are pretty good across the board. not to mention the warranty options they offer when you buy anything from a 4000 dollar tv or a pack of gum. There is always money in dvd's cd's games, software and most importantly ACCESSORIES!!! they load you up with everything they can. "Are you sure you don't need batteries for your memory card?" "Oh, and wait til you see the difference this cable will make!!"

Part of the money you pay for high end audio gear is service and consultation. Big box shops miss the boat on this.. Doesnt matter if its Audio or Golf clubs.. thats just the walmart new age business model..

 

[gus6464]

Take for example the Geek Squad branded USB cable for a printer. Price at store? $34.99

Price for employee which is cost + 5%? $2.58
You are looking at ~1400% markup. Now how many of those things do you think they sell per day? Accessories is where it's all at and it's their bread and butter along with the service plans.

 

[mudrummer99]

No offense, but you drank the same koolaid that they force down the throats of the majority of their customers. These items arent any more marked up than other dealers. If any thing, a lot of the avg price sold for say the Klipsch RF62 will be less than a boutique shop. These stores DO NOT STAY OPEN due to their HT margins. They stay open due to bulk buying and margins are pretty good across the board. not to mention the warranty options they offer when you buy anything from a 4000 dollar tv or a pack of gum. There is always money in dvd's cd's games, software and most importantly ACCESSORIES!!! they load you up with everything they can. "Are you sure you don't need batteries for your memory card?" "Oh, and wait til you see the difference this cable will make!!"

Part of the money you pay for high end audio gear is service and consultation. Big box shops miss the boat on this.. Doesnt matter if its Audio or Golf clubs.. thats just the walmart new age business model..

I don't know where you get your facts about margins but here's a good look at a first hand perspective of them. accessories are a huge markup, but the sheer numbers that have to sold to make the same amount as a single TV would make it impossible to make the kind of profit necessary to remain a business, as the next post after you states, a $32 margin on a single usb cable. Ok, $32/usb is the margin on that and i would say an average margin on an HDTV is somewhere in the neighborhood of $300-$750 or better on some models. Even at the low end of $300 a TV, that's a lot of usb cables. yes accessories are a lot of margin, but there are only a few items in the stores, accessories wise, that are this kind of margin. yes, HT cables are a decent amount of margin, but I haven't meet a salesman yet that can average the sales margin on accessories in a day to what selling 1 TV would bring in (and we sell a lot more than 1 a day). Another note, DVD's, CD's, and games ARE NOT large margin items. On average these are only a buck maybe 2 in mark up. Warranties are also a large margin item, but the number of consumers that are willing to buy one (especially after Consumer Reports constant, and for the most part rightly so, bashing of them) is going down and down, as is reflected in the number of them that is expected for us to sell on a daily basis. Do I agree with this business model, not really, I'm very much a full service kind of guy and would rather work with 3 customers over a shift than 20, but numbers are what is expected of me, so I do what I must and go home at the end of the night. As people are fond of saying around here, Joe Sixpack wants what he saw the infomercial say was the best, and he's "done a lot of research on the product" and doesn't want to be educated otherwise. Those are the people that big box stores cater to, not usually people on forums such as these that take pride in have a good knowledge base in their hobby. I have personally NEVER sold Bose, even though it is a large margin and very popular item, I refuse to send a customer home with it, I'll send them home and have them come to forums such as these long before I send them home with those "cute, unobtrusive speakers that sound amazing".

BTW, how many 100% cable/accessories stores do you know of? There are dedicated HT stores because of the margin it demands allows them to pay their employees and for building space, etc. No, big box stores margins aren't any bigger than other specialty stores, just the difference in volume. This volume allows these stores to become a one stop shop for items that there simply isn't enough profit on to have a standalone store based around, such as computers and appliances.

And as far as the Koolaid goes, I don't buy into bull****, just numbers, and the world is a numbers game. Thanks for the spirited discussion, I really do enjoy it (no sarcasm intended at all).

Mike

 

[adwilk]

Dude, its not about making three hundred on a tv or 32 on a cable... its about ROI or return on investment. I would bet my middle nut that if you looked at the annual figures for these types of shops that total gross profit from AV accessory sales is higher than that of tv's and the investment is much much less. Nobody is gonna argue margins, those figures are obvious but i think you'd be surprised where these stores make their money. I'd be surprised if annual tv sales were enough to pay for the advertising dollars the company spends.

As far as getting facts, I've managed large specialty retail shops and worked as a buyer for a regional territory for such stores. I've also been on the OEM side.

As far as accessory stores go, i think Radio shack has done ok... These home theatre shops stay in business by doing design, consultation, installation, and of course the accessories that make it all work. Go buy cheap speaker cable at one of these shops... you cant.

 

[mudrummer99]

I see your point. Huge ROI is good, but how do these store stores sell enough at this price point to NET the numbers would over take higher margin items. In my experience, expected accessory sales, and subsequently net margins on these are significantly lower than that of bigger ticket items such as tvs and speakers. I am very curious how that whole thing works out. If you could add more insight into your last post, that would be awesome (I was a music major, not econ )

Mike

 

[gus6464]

Next time you go to a best buy count how many things have the Dynex, Rocketfish, Geek Squad. Each one of those will have around 800% markup. Now on Home Theater it really varies on brands. You know what brand of TV has the lowest markup? Sony and I am not kidding. The only exception is the XBR line which is a little higher. Samsung used to be lower but after becoming the #1 LCD maker it inflated big time. Highest markup? Pioneer Elite at over 100% for plasma. That 42in Kuro which sells for $4500-5000 costs around $2000.

 

[adwilk]

I see your point. Huge ROI is good, but how do these store stores sell enough at this price point to NET the numbers would over take higher margin items. In my experience, expected accessory sales, and subsequently net margins on these are significantly lower than that of bigger ticket items such as tvs and speakers. I am very curious how that whole thing works out. If you could add more insight into your last post, that would be awesome (I was a music major, not econ )

Mike

Well its obviously about balance. If you include all tv's, speakers, receivers, along with all the other big ticket items (say over $200) like computers, appliances, furniture, cameras, game consoles and so forth those dollars do add up. I'd say that if you knew the average ticket, you'd see that its much much smaller than most of these items cost. These accessories are responsible for increasing the avg ticket amount. That is why they are pushed so aggressively. It starts at the OEM side. Sony practically gives away the PS3 knowing that it will make TONS of cash selling the little stuff that makes the system attractive. Games, controllers, cables, etc.

Try to think of it this way... there are what... maybe 60 or so models of TV's at any given time? There are thousands of accessories in that store.

Sell 60 tv's at avg 200 bucks profit and thats 12 grand right? maybe thats a week.

Sell 3 accessories to each of those purchases at an avg of 30 profit and thats 5400 profit on those sales. Almost half of the profit of the tv's, just from those that actually bought tv's. Add up all the walk in traffic and you can see how quickly it adds up.

Any of that make sense?

 

[mudrummer99]

I see what youre saying, what I'm getting at is that on avg, HT items are 30% mark up, while most of your other big ticket items are no where near that ranging from 5%-15%, computers and game consoles being at the extreme low end of that. PS3's are nearly no margin at all, big box stores only make about $15 per unit. yes the accessories are where these make the money, controllers cables and peripherals and to a small degree games. but the overall profit of these lower margin big ticket items can not compete with that of the HT, even when you throw in a $32/cable margin. I do get the basket attatchment thing, since it is preached on high all day long, but i guess what I still don't get is where you don't think HT is where all the profit is? Accessories other than HT and computers are not nearly as much margin, such as cameras and the like. I do understand that grabbing this cable or that keyboard or whatever adds up, but I guess I just don't see, from my perspective, that being a bread and butter part of the business, but i could be very wrong about that.

Mike

 

[3db]

Getting back to the post at hand.. How do the big box stores to specilaity shops with video/TV?

 

[mudrummer99]

yes, 3db is right, sorry about the thread jacking.

From what I've seen, they compare favorably. As far as price goes, you will probably get a better deal from a big box store than a specialty shop due to the large volumes they deal with. Both types of stores usually offer some sort of extended warranty, but that is completely up to you and is frowned upon by most consumer advocate type publications. Specialty stores may carry a 2-4 brands while a big box store will carry quite a few more than that, but a specialty store will usually have the complete line from a manufacturer, like Pioneer and Pioneer Elite. Unless it is a Magnolia or similar type store, most big box store will carry normal to low end runs of the TVs. And as was said in previous posts, you can't top a specialty stores customer assistance. What I usually do is go a specialty store to learn about the products and then go to a big box store and buy it if the price is that big of a difference, more than $300 is a big difference to me. Hope this helps.

Mike