Retail Observer

RETAILOBSERVER.COM OCTOBER 2014 54 F or the first time in five years, CE retailers finally have something to get excited about – making money! Today's new technology, with its Ultra HD OLED TVs, curved screens, streaming WIFI video and audio, gives merchants an opportunity to reap the rewards from the new, big-ticket, high-margin entertainment systems. But there's a catch. You can't sell these systems the same way as the "old" flat-panel TVs or other "commodity" items; and traditional discounting is a recipe for disaster. You need an entirely different approach–to your advertising, to your merchandising and to everything in between–because the customers for these products are not traditional consumers motivated by deals. They are what Mega Labs calls "Neos*," people seeking the unique, the personal, the authentic, the extraordinary, and they are willing to pay for it. While price is still important, they need to feel a connection to the product; it has to reflect their individuality, their values and enhance their lifestyle. Transcending the usual demographic categories, Neos represent 48 percent of consumers, and 93% of all the people who can be classified as big spenders. Independent retailers who "get it" are already doing rip-roaring business, and in the case of one astute Cantrex Nationwide (CNW) member, outselling competitors four systems to one. Here's how: • The "Wow" Factor. Sticking the new high-tech TVs on a wall won't cut it. You need to wow your customers by letting them experience the possibilities in an environment they can relate, or aspire, to. Follow the lead of successful high-end appliance retailers and create room vignettes. Showcase a system in an inviting, luxury space created with top-quality seating (two or three individual chairs), lamps, an area rug, even a fireplace. Keep these "rooms" open to your showroom floor, not closed off, which makes consumers feel trapped. Cantrex Nationwide helps its members merchandise this way and has sourced these accessories for $2,000 or less per "room" – a sensible investment for systems retailing for as much as $20K. Memory Express has created three separate "rooms" in its Calgary, Alberta, store—one for OLED, one for 4K and another for Curved— that feature not only the panels but how its team can integrate all the bells and whistles, like WIFI connections and streaming. Audio Warehouse (Saskatoon, Saskatchewan) is in the process of completely remerchandising its store to be 70 percent "Neo," 30 percent commodity, because that's where the biggest returns will come from. • The Personal Touch. Neos prefer to deal with people, not corporations and brands, so consider inviting them to an after- hours V.I.P. event to present these new entertainment systems. Call your best 50 or 100 customers. A personal invitation makes them feel special and is difficult to refuse. For greater impact, get your vendors involved in these presentations. (If you carry different brands, schedule multiple presentations.) Go upscale, with wine and cheese, or something more original. Don't expect to sell an entire system from such an event. Customers may decide to keep their old TVs for now but may walk out with new audio speakers, WIFI or other accessories. The point is to enhance your relationship with your best customers, engender trust, encourage word-of- mouth referrals and position your store as the place aligned with their values. • White Glove Service. Premium products warrant premium service. These new entertainment systems are complex. Some customers may want to integrate components into their current systems or have a system designed specifically for them. Successful retailers are offering turnkey, "white glove" solutions, from delivery, installation and integration to follow-up tech support. Some are selling "enjoyment packages", a prepaid fee for a certain number of hours of training and help from a technician, all to ensure customers get the performance they've paid for. This provides downstream revenue and keeps the customers close, so when new components arrive on the market, retailers have a captive base to upsell to. • Lifestyle Advertising. To attract Neos to your store, consider lifestyle, not mass, advertising. Several CNW members are having great success advertising in a few glossy, high-end lifestyle magazines that sell furniture and feature luxury homes. Neos still want value for the money but they shop differently. Independents who understand these consumers are doing well despite the difficult economic environment. If you approach these consumers properly, they will ensure that your business remains profitable and sustainable for years to come. * A Tour Guide to the Two Planets: NEO and Traditional, Mega Labs, June 11, 2013. http://vimeo.com/68180098 RO Darryl Wilks Consumer Electronics Trends Darryl Wilks Business Development Manager, Western Canada Cantrex Nationwide THE SECRET TO SELLING THE LATEST CONSUMER ELECTRONICS

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