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Alternatives to Brick and Mortar

I didn't want to further derail @millercarbon's Tekton Moab thread, but I think it is a worthwhile topic to discuss how to find speakers that meet our listening tastes, aesthetic tastes, budget, room, etc. Brick and mortar retail is dying because it's becoming very difficult to operate profitably. 

Full disclosure - I own and operate an e-commerce cycling business. For ten years, I also had a brick and mortar operation (multiple locations). The economics are a bit different than audio since our average sale was only in the very low three figures, but it's not that different. We still had bicycles that we sold for over $10K, but the cost of those sales was quite high. Over the ten years we had the stores (which were 4-5 times the national average in size and revenue), we made a profit from the stores in three of those years. Fortunately, our e-commerce business was much more profitable and allowed us to cover those losses. 

Brick and mortar is becoming more expensive due to higher lease rates, higher payroll costs, and competition with other sales channels. To keep a brick-and-mortar sales channel viable, the manufacturer has to offer the dealer a fairly sizable margin (generally 35% to 60%) and have enough sales velocity that the store can cover their expenses. It's pretty rare these days that there are products that fly off the shelves at a specialty audio retailer. 

Our handling costs are a lot lower in our e-commerce operation, but even in this business, the only products we're willing to carry that have less than 40% margins are products we can get 8 turns or more on. This means that the manufacturer has to have plenty of back stock and be able to replenish our inventory quickly, and also means that the product has to have high and consistent sell-through so we can accurately predict our inventory requirements.

For a specialty audio dealer, there are very few products that have high volume. If you think about how much time you've taken up of a dealer, products you've brought home to listen to, etc., versus the products you've actually purchased, it's an awful lot of cost that has to be absorbed by the dealer. I've read countless posts on this forum and others of people that have brought multiple products home from the dealer (or from an e-commerce vendor) only to return it. This costs the dealer (whether brick-and-mortar or e-commerce) a lot. A lot of this returned product has to be sold as open-box or b-stock at considerably less profit, let alone the shipping cost that is often absorbed by the dealer. To stay in business, they have to make enough profit on the product they actually sell to cover their expenses.

For an audio manufacturer, they have to consider the cost vs the value added by having a brick and mortar channel. More and more are deciding they can offer more value to the consumer by keeping the dealer margin in their own coffers. 

My career has resulted in my living in a number of different areas in the country since I've been an audiophile, so I've probably shopped at 25-30 different stores. Very few of these have had listening rooms that did the products justice. In many cases, the rooms were crammed with 5 to 20 different speakers. Even in the shops that catered to high-end budgets, the speakers were not optimally set up. This isn't surprising since the dealer is trying to sell a lot of different models. 

In the more affluent markets, dealers are willing to provide home auditions which helps a lot, but this is expensive for the dealer and they have to count on a reasonable conversion rate. Too many consumers are willing to take advantage of dealers that offer this. I've seen posts from consumers that literally try a dozen or more speakers, or other components. How do they expect the dealer network to survive. 

So what's the alternative? I think for the manufacturer, the best alternative is to do what companies like PS Audio offer. They have a very nice showroom at their facility if you are willing to make the effort. They offer easy returns if you want to purchase a product and aren't happy. And they participate in many audio shows where you can compare their products against many others. By selling direct, they save the considerable dealer margin can cover a lot of customer service costs, including dealing with higher returns and supporting more audio shows.

Sorry for the long post. I look forward to hearing your thoughts and ideas. 
128x128jaytor
fuzztone's avatar
fuzztone
5,591 posts
 
There ARE companies that are cheaper being started without needing a dealer/distributor network.  PS Audio is not one. They have no showroom, just listening rooms featuring speakers not for sale. Yet.
If you wait for Black Friday or a show sale you can send them some junk (for trade in) and get 40% off.
They still make a profit.
I've bought more HiFi stuff at a discount on line in the past 3 years. than when I started in the 80's, primarily from 2 dealers then. One of whom is still operating physical sales successfully.
The other went back to masonry to feed his family.
Post removed 
edcyn
1,876 posts
 
jaytor -- I recently retired to a small town in Hawaii where high end retailers are few and far between, but I lived in L.A. for most of my life and for much of that life I've been an audio enthusiast. 

In those days I always put my money down at brick-and-mortar stores.  It was truly seldom that I resorted to mail order.  It's just an incredible luxury to go to a quality retail outlet and have them put on a demo for you, letting you bring some of your own stuff for a good old taste test.  I want to see the merchandise IRL and flip switches.  It's only when the stuff is up to snuff that you take it home for the night.  Plus, I just hate waiting for a delivery guy to show up.  Even worse is waiting in an endless line at the post office/whatever to do the return.

As an aside, I gotta tell you, too, that, like several other posters on this site, I'm a ready-to-be-committed bicycle enthusiast.  And, when it comes to bicycles my brick-and-mortar predilection is even more extreme.  I've bought high-end bicycles from Bicycle John's in Burbank, I. Martin Imports in West Hollywood, and Velo Pasadena.  I bought my current ride, a Campy Chorus Bianchi Infinito, at a place that was within walking distance of me for a while (I can't remember their name but they were in Sherman Oaks).  The only high-end bicycle I ever bought sight unseen was a Rivendell Ramboulet...which turned out to be the one I liked the least and got rid of the most quickly.  Beautiful to look at but a dead dog for actually tooling down the road.  Now I'm happily downsized with just the Bianchi and a modestly built-up Tomac Buckshot.

Long story short:  If I could still buy at a brick-and-mortar store I would, but that luxury is now in the past.  I can say, though, that I've found a couple of dandy high-end bicycle shops in the vicinity and always do my best to patronize them.  It did, though, take an agonizing amount of time for one of the bicycle stores to score me a  fresh set of cleats for my Mavic pedals.
jaytor's avatar
jaytor OP
763 posts
 
I guess I didn't do a very good job in my original post explaining what I was getting at. I have nothing against dealers. I have worked with a number of dealers over the years that I really liked and got a lot of value from.

My concern is that this kind of dealer is becoming the exception, and not the norm. And it's not the dealer's fault.

When I was starting as an audio enthusiast in the early 70's, the products I became familiar with, and ultimately purchased, were those offered by the few dealers I had access to. Yes, Stereophile and TAS introduced me to a few other brands, but it's nothing like it is today.

The wealth of information available on the internet results in consumers (myself included) that are often looking at a much broader range of products and brands than any one dealer can carry (or even all dealers in a small city), particularly in the mid to upper end of the market. Closing the deal on a purchase for a dealer becomes much less likely. This, combined with rising operating costs, makes it more difficult for the traditional dealer model to survive, or at least to provide the service I'd like to see.

I'm not rooting for dealers to fail - quite the opposite. But I'd like to have the opportunity to hear products in a well designed listening environment and most of the dealers in my area, for one reason or another, don't seem to have been able to pull this off, and many of the products I'd like to hear aren't available for demonstration near me.

So what are the alternatives?
northman
249 posts
 
I've been thinking a lot about these issues since December, when my go-to store for over thirty-five years closed. Let me say that I completely understand those passionate folks who are "hobbyists," frequently buying/selling/trading equipment. For them, I think that buying online without a test drive makes sense; as long as they can be relatively confident of the resale value, it sounds like great fun to bring things into your listening space for a month or two, get the feel of it. That's not me, at least not yet; when I buy a pair of speakers or an amplifier, I'm in it for the long haul.

And I would never spend $5k-$10k on a pair of speakers that I hadn't auditioned. Honestly, that seems nuts to me. Research can get me close but there are so many subtle differences even from the same company that it's impossible to simply read/research and know. Take, for example, the many threads that compare Harbeth to Spendors, or that compare speakers within the Harbeth line. 

Of course it's possible to spend five figures online on a set of speakers and love them. Most speakers at that price point should sound pretty darn good. But you'll never really know how much of your pleasure is simply your desire to like something you have put your heart and faith into, and there's no way to know how those speakers might compare to the other speakers you didn't buy--unless you want to spend months buying/returning. How many speakers, just within the Harbeth line (for example), can you listen to that way? And what about speakers that weigh 75lbs or more--not so easy to set up and ship back. I'm not knocking anyone who buys online; I just don't think it's as good as being able to go to a store and listen.

(The argument that we save money online is questionable. Sometimes yes, sometimes no--but the real issue is whether online sales help or hurt the audiophile market. Most mid to high end equipment that is currently sold both online and in person costs roughly the same. It may be that a company that is only online can sell their stuff for less without the dealer mark-up, but that's speculation. To use the big example out here, do we really know what Tekton speakers would cost from a dealer? And dealers provide a service, so it's reasonable to pay for that. I've found many dealers are ready to discount, especially with established customers.)

I didn't take the OP's post to be aggressive. I thought he was simply asking, as he did in his recent post: what is the alternative to BOTH online sales and brick and mortar stores? That's a good question. Audio shows are part of an answer. I auditioned a pair of high-end speakers through a dealer who had everything set up at his house. There wasn't as much selection, of course, but there also wasn't any rush. I made an appointment and we spent a few hours, talking about room treatments as well as speakers and music. Maybe we get used to having 5-10 stores, located mostly in big cities, and they carry a wider variety. I know that manufacturers might not want their speakers competing with lots of other brands, but it might help us. Imagine being able to compare Harbeth, Spendors, KEF, Wilson Benesch, B&W ... all at once? 

I love reading and researching, and I appreciate being able to buy online. I bought my DAC, streamer, and cables that way. And no doubt it's easy to buy really good speakers online. Finding that "magic," finding the sound that makes *your* ears happy, though, requires a lot of listening, and no amount of research can do that for you.

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