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Sony’s New Retail Program Meets Industry Approval

Strategic Investment Program attempts to stabilize margins

March 8, 2012 By Jeff O'Heir
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Sony Thursday announced its Strategic Investment Program, a wide-ranging CE retail initiative designed to increase margin and highlight product value and features over price.

"We talked dealer by dealer what the impact will be. I think the important thing is to retain margin on their side," said Phil Molyneux, president and COO of Sony Electronics, who began working with retailers on the program last October. "This is a conscience effort to help the retailers and help Sony improve their messaging to consumers."

The Strategic Investment Program includes three main elements: a unilateral pricing policy, which the company began in 2008 under the popular SURE (Sony Unified Retail Execution) program with its Alpha line of cameras; rewards for retailers that follow agreed upon criteria (as well as penalties for those that don't); and inclusion in special promotional activities.

Retailers and buying group executives have praised the recent pricing programs by Sony and Samsung, as well as initiatives by LG and Panasonic that prevent the sale of certain products through online third-party marketplaces, as the right start in trying to uphold product pricing and increase margins. Most of them, however, note that manufacturers have instituted similar initiatives in the past and quickly abandoned them for the sake of volume sales.

"We're very encouraged by what we're seeing from vendors. Independent retailers have been seeking it for a long time, and we're glad to see the response by the industry on profitability," Doug Schatz, vice president of electronics merchandising, Nationwide Marketing Group, told Dealerscope. "Change must occur for the health of the industry. Every aspect of every program may not succeed, but in aggregate we're confident they'll lead to a healthier electronics business in 2012."

Sony's Strategic Investment Program kicks off April 1 and includes a unilateral pricing on 140 higher-end SKUs, including Bravia TVs, receivers, projectors, tablets and some headphones.

Molyneux would not provide specifics on retailer rewards or penalties, other to say that rewards could include discounts, allowances, and promotions, while penalties could including stopping orders to retailers that break UPP and other program policies. Under the program, Sony will provide retailers with specific training, as well as unified messaging and marketing materials, Molyneux said.

Leon Temiz, CEO of Electronics Expo, a CE retailer with seven stores in New Jersey, said the main rewards for retailers that follow the criteria is that they'll be able to remain in the program and maintain their agreed upon pricing deals. The penalties, he said, could include the loss of co-op funding and, depending on the number and severity of infractions, expulsion from the program.

 

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