From Products to Services
It’s a tough world out there. Prices continue to drop, margins sink and competition increases. That’s what happens when desirable products, smart innovation and low prices fuel consumer demand. The thousands of people lined outside of retailers waiting to take advantage of the 40-percent price drops in LCD TVs during the holidays was enough to tell us how quickly the market is changing.
It all comes from the one major challenge facing our industry: how to reap the benefits of the incredible and desirable new innovations within a market that demands ever-lower prices. But with all things this is part of the fun of the game and there is an answer to the madness.
For starters, overly focusing on just the pricing and margins associated with single product categories like a TV or a DVD player is getting caught up in the box-pushing mindset of the past and ignores the greater opportunities in front of us. At one point in its past the CE industry thrived on the sale of these individual pieces of hardware, but now it is growing beyond being product driven into something more—a service driven economy. Here’s the point. As margins on the individual products continue to get squeezed, it is the services retailers offer that become even more important to maintaining the bottom line. And the good news is consumers are telling us they are increasingly looking for more than just a box when they head to the store.