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Tuesday, June 19, 2012

What can we learn from the electronics category?

Trend Observation:  I live in Minneapolis, the home-base to retail giants like Target and Best Buy.  So I take no pleasure in sharing a story from today’s New York Times about the shake-up in the retail category of electronics, which focuses particularly on Best Buy.  Click here to see it.

Marketing Implications:  In part, Best Buy’s success was in using their massive size to create a price advantage; their sheer scale and buying power let them out-price competitors (remember Circuit City, or other smaller retailers who are long gone?).  In a way, Amazon and Walmart are doing some of the same things.  Amazon skips the expense of a physical store and staff by selling online, and can thus sell cheaper.  And while Walmart might offer a more limited variety of electronics, it can sell those products cheaper, again, due to scale.  It might seem that a couple of big competitors are doing unto Best Buy what Best Buy did unto others only a few years ago.

While they don’t disclose revenue in the story, Best Buy competitor Abt Electronics is attracting customers with experiences.  Target is also less enchanted with the price strategy, opting to begin carrying more Apple products. 

What is your competitive advantage?  Could it be used against you, in months or years from now?  Is your competitive advantage as relevant as it once was, or should you be considering new approaches?  All of these are questions, of course, that are best answered by involving your best customers and target consumers.  After all… they’re the ones who will decide whether or not someone is “best.”

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

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