CE Manufacturers Take Heed: Why Store-Within-A-Store Is A BAD Idea!

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00713_00791The other day Gary Kayye wrote a very on-point, insightful and rather harsh editorial about Samsung and LG’s pursuit of store-within-a-store experience centers in Best Buy.

Gary makes a number of excellent points about how major CE brands aren’t failing because they aren’t doing retail like Apple does; they’re failing because their products aren’t well designed.

The rush to retail is perplexing and, to me, speaks of a shocking naiveté on their part. LG and Samsung should ask Sony about retail: I worked for Sony at the peak of their retail store count in Canada, and they’ve been contracting ever since.

Just in the past two years Sony Canada has abruptly halved their number of retail locations, and guys that I worked with fifteen years ago (Lifers I
always called them) have to face the unthinkable: life without Sony.

Notwithstanding Sony USA’s current fascination with new Experience Centers, Sony’s history with retail has been checkered and best.

Building on all of Gary’s excellent observations I’d just like to add that, in my experience, store-within-a-store concepts aren’t a marketing master stroke: They’re the last gasp of failing retailers when nothing else has worked.

I remember when Eaton’s, a Canadian department store with over a century in business adopted stores-within-a-store, including, but not limited to
Sunglass Hut and People’s Jewelers. Eaton’s was bankrupt and vanished from the retail landscape within two years.

And the Samsung/Best Buy thing isn’t even new: Hudson’s Bay Company, the oldest Canadian retailer with over 400 continuous years in business tried a Samsung experience center nearly ten years ago. HBC didn’t go under (not yet, anyway) but the project quietly faded from sight in even less time than it took Eaton’s to tank.

Anytime a retailer tries to coax a partner into supporting store-within-a-store they’re not seeking to enhance anyones brand image: They’re seeking avoid paying for inventory and wages, and off-loading those costs on their new partner. Store-Within-A-Store is NEVER a good sign.

If I was Samsung or LG (or anyone else for that matter), I’d be more concerned with making sure my Accounts Receivable department focuses on keeping Best Buy paid up on time than spending money on opening Experience Centers, but I’m kind of cynical.