The electronics industry faces its doomsday, and has done so for many years. Ever since the German giant Media Markt had entered the Swedish electronics market, it was a hard and ruthless price war. The losers were and are numerous; countless Swedish chains have fallen into battle. Latest to fall is Siba, but before that it was Expert and also the enchanting OnOFF. Forgotten and without tombstone. Nowadays, it is revealed that Media Markt will most certainly give up Sweden and sell its 27 stores it occupies. So what was the point of all this in the end, one might ask? As it stands now, everyone loses – the industry has taken a lot of stick, but the consumer have not survived unharmed. Even though there have been constant sales and negative margins on electronics customers more than enjoyed over the years, the day has come when the vendors have to start charging for the party that was. Customers need to prepare and realize that the days when a TV or cost $299 US dollars are over and they should not be surprised if it surpasses that price by double.
To vendors and retailers: do not be afraid to charge for your hard work! Set prices that will cover your expenses, depending on your position in the market, the nature of your goods and services and how your competitive situation looks. Dare to put prices above the retail price. Assume you may be forced to sell out parts of your inventory, production loss and other circumstances that may put your business in danger. Other might hopefully follow.
Will the winner always be the one that is underselling and reporting losses to cut the competitors? It absolutely does not have to be that way. Pack your services or goods in such a way that you offer added value and become unique in your delivery or find your own niche by offering package solutions and services that are not exploited. Here you will find the golden middle ground where the overall experience is greater than the sum of your packaged parts. Always make sure that each delivery provides more than the customer expects. Sounds like a no-brainer? Well, this is something you can not afford if you sell with no margin of profit. The companies who can handle complaints with “I will ship you a new product, and you do not even have to return the defect” gets not only long-term customers, but also almost completely eliminates the cost of complaint handling. Make sure you have a higher margin on your products that you have the opportunity to give your major customers a free discount, thus running temporary promotions, launching new products and packages, all with a retained base margin.
You will never lose customers by lowering your prices, but a necessary sudden forced increase may be devastating to the customer base.
Disclaimer: This article was originally written by spare parts, tools and accessories wholesale distributor Telius to its retailers situated in Sweden and Scandinavia.