Acquiring Minds Tweeter Makes a Big Deal Out of Being Small
Key factors for Tweeter in staying profitable while expanding include keeping the footprint of stores small and the products in the upper echelon. "Our concept is to be the best little hi-fi store in each town," said Bernie Sapienza, Tweeter's vice president of merchandising. "We're not trying to make our average store volume $20 million like Circuit City. We're just trying to litter the countryside with a bunch of these little stores that do about 5 or 6 million bucks apiece."
Herschman agreed that Tweeter has come up with a formula for being very profitable with 5 million dollar stores. "We're trying to become the world's largest small CE retailer," he said. Part of the success comes from staying away from commodities. They feed off the CE cycle that replaces a formerly high-margin product like a DVD player with another high-margin product—in this case progressive scan DVD or a DVD recorder—as the older one commodifies. "We're only appealing to perhaps 25 percent of the population that really takes this stuff seriously," Herschman said. "If you're not one of those people, you're probably not going to be a Tweeter customer no matter how hard we try or how hard we market. And I think one of our strengths is the ability to let that go and say, 'We don't have to have 30 percent market share.' "