A: Consumer electronics is so device driven. The device that matters more than anything is the phone. What we have seen is essentially the shrinking of the store because the place where most consumers are purchasing their phone tends to be a smaller format store whether it is a carrier store, an Apple store or a Best Buy mobile store. It is more of a challenge in the rest of the CE ecosystem. A lot of that is a commoditized race to the bottom. I am waiting for more device innovation because that is really where the biggest opportunities are for CE.
A: The phone is the best self-service automation tool. The phone answers almost every question you have. Ultimately, we will probably see something along the lines of the Apple Store on your phone or an app where you can scan and checkout. It is still early because I don’t think that retailers have igured out loss prevention for that yet. The Amazon Go Store is also a model.
A: I would argue that there has not been enough consolidation. Acquisition has not typically been a retail strategy and it absolutely should be. I don’t know if it is because so many are mired in debt so they don’t have the luxury to acquire but that is their path to the future. Retailers are still caught up in the traditional model — a buyer has to put a PO in for tens of thousands of units and wait six months for the product to show up at the distribution center. They need to be more nimble.
A: While everybody would love to get everything really quickly, very few people are willing to pay for it. Amazon has set up distorted expectations because they do fast delivery and they don’t pass the cost on to the customer. But they have managed to ind a business model to make that cost effective. The vast majority of transactions still take three to ive days to deliver, including Amazon transactions. Prime Now set the expectation but even some Prime orders don’t get delivered in two days. The interesting thing about the returns research is some people don’t shop online because returns are a frustrating experience. Very few companies have differentiated themselves on a more seamless returns experience so these are places retailers can focus on.
A: What Amazon did brilliantly is it showed what a drone delivery could look like and captured the imagination of people. But the reality for that to really come to lifehas more questions than answers. We have no regulation around who is allowed to deliver by drone and in what circumstances and in what part of the airspace, under what types of conditions, what time of day — so that needs to be thought through. The federal government can regulate to some degree but cities and states are going to ultimately decide. The biggest concern is how does the drone know where to deposit the package? It could be disrupted by anything from telephone wires to trees and there is no infrastructure to receive packages. If you are in suburbia and you have a yard, it may make sense but what about a condo? Also most drones can only go ive miles so who is located five miles from homes? FedEx possibly, UPS stores, maybe Walmart, Target, Walgreens or your grocer. You won’t see drone deliveries for groceries because that weighs more than five pounds. Drone delivery could make sense for pizza. Dominoes is everywhere, they are five miles from many homes, a pizza weighs less than five pounds and their biggest cost is labor. But it is unlikely to be a game changer for deliveries any time soon.
A: Any type of value-added services or bundles like installation or cost-transaction advice can be really valuable. Take Sur La Table — they make money off of their cooking classes. The Apple Store got a lot of traction with film editing classes. Stuff like that is value added and people are willing to pay for it. It also drives people to the store and is a way to upsell — if you want to take this great photo, then you need to buy these lenses. With the amount of creationism out there, romancing and giving people classes on how to set up a blog or whatever is new — for example, a class on understanding Snapchat for consumers. These are opportunities, wherever there is a gap between the knowledge base that people have, an electronics store could step in to that space. It would not be that hard to pull together.
A: Any type of alternative revenue stream is valuable. It could be anything from hanging a big flat-screen on the outside of your store and advertising on it to ads in the store itself. Rooftops could have solar panels and they can sell the energy back to the city or even have a rooftop garden. I think anything and everything can monetize their physical real estate. If you have excess space you could sublease some of the space to startups or provide free real estate in exchange for them acting as your onsite geek squad.
A: A makerspace is an opportunity because there is definitely interest in robotics, code and engineering. How can retailers take a piece of that? If I were in the CE industry, I would do some ethnographic research at local schools and visit their makerspace. I would spend time with Lego League clubs that have engineering for kids. What are their parents spending money on? Is there an education adjacency that these companies can think about? Because now they are heavily dependent on the next innovation coming out of Apple and the next TV, but they could rethink their business model. An industry to look at is the college bookstore. Digital media killed college textbooks so they needed to find an alternative revenue stream. They went into licensed apparel and then started to sublease space, and most are also authorized Apple resellers. They have cafes, banks and many lease space to Verizon for cell towers. They went from 80 percent books to 30 percent books. I would challenge retailers to look at what is next because more electronics are being commoditized and sold online or being sold on Amazon. Where are the best opportunities to pivot?
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