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Retail Buying - Reality Check

Like all of you at some point in time, I caught the Audio and HT bug. I started out at the usual places - Hi Fi Buys, Best Buys, etc. and moved on to the niche, locally owned hi end audio and HT boutiques. There I met generally more knowledgeable salesmen (no women yet). I also started doing my homework out on the web and came upon great sites like Audiogon and AVS Forum to name a few.

Your knowledge and experience has been invaluable to me. Unfettered by the product lines you have to sell, you provide a far more level playing field of unbiased opinion.

Here's my dilemma: I am a small business owner myself, and I value local market presence and customer relations. I'm even willing to pay a small premium for this intangible. However, when the quotes came back from 3 different retailers in Atlanta ($65 -80k), they were all for MSRP plus tax plus design install and misc. such as clips and straps ($250-$500 worth!)

Now most of the hi end equipment today has "burn in" periods of several to hundreds of hours before peak operating performance is obtained. So, buying new at full MSRP also meant getting inferior performance for the necessary burn times. So no big benefit (except some warranties) to buy new.

By purchasing from sellers on sites like Audiogon, and purchasing nearly new or sometimes new products, I have saved $16,000 plus $1,000 in sales taxes on approximately $50,000 of my quoted MSRP prices. I'm not done yet. I also have the flexibility of buying the exact product line I want, not just what my store has to offer. There is great pressure in the retail setting to go "one stop shopping" at your store of choice.

I understand these stores need to make a profit. However, 50% markups on items that they don't keep in stock and have to special order, seems out of line to me.

Caveat emptor is certainly a key consideration in on-line purchasing, but to date, through careful checking of prior seller transactions, prudent payment techniques and telephone conversations with the seller to allow me to make some kind of character call, I have had nothing but outstanding, as promised transactions.

I hired a HT acoustical designer and a certified installer and I couldn't be happier, except for one thing. I still feel a little guilty about not buying from the guy with the storefront who spent time with me. I just wish they'd recognize where they do and don't add value and charge accordingly.

Anyway thanks guys, for the great education and advice you've provided me.

What say you?
rogocop
marty9876
120 posts
 
This can go either way.

1. You screwed them by wasting their time with bids. You picked their brains, occupied their time and spent your money elsewhere.
2. They screwed themselves by not cutting you a deal.

I'm sure the truth lies in the middle.

The big issue I have is 50% mark up, at least, for products that are unheard. If the store offered 30 day full return with no penalty, than I can see this. My guess is they did not.

Marty
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swampwalker
5,132 posts
 
Well rogo, you've identified a major problem in high end retailing. High mark-ups vs. ready availability on the net or nearly new product. I have made a decision not to go cruising the salons when I will likely buy on the net; I have a small business (not retail) and I would feel very uncomfortable. However, if they are quoting you MSRP prices and then adding design fees on top of that, then they are getting greedy and cutting their own throat. Their mark-up should include system matching and recommendations. Unless they are doing a custom install, its not really a "design", its just the value added that a retailer provides. Even if it is a custom system, they are probably making a pretty good profit on the install work, kind of like kitchen companies. If they do the design and you buy the cabinets and labor elsewhere, you pay them a fee. If you buy the hardware from them and have them do the whole kitchen remodel, the design work is usually gratis. It doesn't sound like you initially intended to take their time and then use the knowledge you got elsewhere, but that's what you ended up doing. If you had that intention going in, then shame on you, but it doesn't sound like that's the case. Anyways, I would hope that you would now realize that the moral thing to do is to make a decision up-front; buy on the web and rely on this site and live with your mistakes, or buy retail and pay the added cost. You should also be aware that there probably is a middle ground in terms of finding a dealer you can work with long distance, who will also cut you a break on the price.
ed_sawyer
588 posts
 
There's no clear right and wrong in issues like this but a few facts: nearly no high-end lines have margin of 50%. some cables, maybe. (Transparent springs to mind). Most gear is around 40%, maybe 45% if you pay the invoice in 7 days, etc. Video gear is even less, try like 30% or so. (TV's, etc.).

Ultimately if the retailers don't survive (somehow), the manufacturers don't survive = kiss goodbye the idea of high end in general. (taken to logical conclusion). Where do you think used/demo gear comes from?

"So, buying new at full MSRP also meant getting inferior performance for the necessary burn times." This is BS IMNSHO. burn in as a concept is overrated.

"However, 50% markups on items that they don't keep in stock and have to special order, seems out of line to me. " So tell us about your business. Do people know your margins? Do they beat you up on price about them? Is it justified in their eyes?

" Unfettered by the product lines you have to sell, you provide a far more level playing field of unbiased opinion." not really. There's plenty of dealers here masquerading as consumers, and pimping their stuff. Likewise, plenty of insecure buyers that like to reaffirm their purchase choices by talking them up. (and trash talking stuff they don't like.). Read between the lines and you will see this fairly often here, FWIW.

RE: whole-home system installation: It's a service like anything else, and there is a cost. Design may be free (or at least subsidised) but parts and labor never are. Skilled designers/installers don't come cheap and of course their labor is marked up by the store. Some stores stay afloat on their custom install departments... its' where the money is right now (along with Home Theater). 2-channel market is very slumped as far as retail goes.

Yes, I buy on Audiogon too, but I patronize my local dealers when I can and when it makes sense. No, I don't pay retail (who does?) but they make enough to keep in business and I enjoy having and advocate should the need arise (e.g. warranty issue, free loaner gear, in-home trial, etc.). The stores I go to have 7-day money back, 30-day exchange, and liberal (free) in-home trial of demo gear. IMHO, that's worth what margin they get on the stuff.

Just a little devil's advocation here.
-Ed
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