economy - Why Best Buy is not going to surviveMostly I tend to agree with the down-to-earth viewpoints Shaun Rein is giving, but his rather positive assessment of the Toy's R Us and Best Buy arrivals in China, I do not share.
I'm not so at home in the kid's toy industry, but more in the toys for adults like "Best Buy" tend to sell them in Shanghai. In the US the retail chain has two factors that sets them apart from the competition: their pricing and their post-sale service.
Best Buy has set up shop almost next door to their largest competitors, the huge malls for electronic products in Xujiahui. Who is familiar with the cosy mayhem of a Chinese market in those malls notes that they are offering a climate that might not be appreciated by your average US consumers but is paramount on the Chinese market, including the haggling. When you buy for more than 20 percent of the original asking price, you have not done your best.
According to some Chinese media reports Best Buy is already admitting they will not be the cheapest in the market. That means they admit they are going to lose, even before they have started! Since Shanghainese buyers will check out all the prices first, that would have been noted by them anyway.
So, what remains is an excellent service. But, you know what I admire at most electronic products these days, is that quality control has become so good, you seldom have to go back with your products. Unless you need of course a huge plasma screen for a party in the weekend and want to bring it back on Monday.
By opening one store in Shanghai, Best Buy might find those things themselves. Rein mentions Ikea as one of the success stories in Chinese retail. Let's not forget they only got customers in their stores to buy after they halved their prices. That might just be the only way to survive in China: a decent price war. When Best Buy does not start it, their neighbors will.
1 comment:
Been to Best Buy today. Saw some people buying high ticket items, which makes me believe they are leveraging their relationship with top suppliers abroad to get a good price here. Their prices for notebooks look pretty good to me. They also have a lot of accessories that cant be found anywhere else (good lcd wipers, clip holders, and all that hard to find line of items for the afficcionados). But they do get beaten up in the small commoditized accessories such as headphones and usb keys (although their selection is pretty good). The price of very good headphones from Logitec was only 20rmb more expensive than what I got it for in XJH a couple of weeks back. Considering you get a fapiao and decent service and warranty and I not so sure they will be out of business so soon.
Their section of notebook bags is awesome and you can see all top of the line Sundex stuff made in china but previously only exported sitting there all happy. I guess most chinese didnt know their own country was manufacturing this kind of REALLY good stuff.
Next notebook I will buy, if not in TST or Mongkok in HKG, will definitely be bought in Best Buy.
But hey I am a laowai so I barely count.
Store was full though...
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