Sony's quiet sales approach leaves retailers concerned
Some retailers aren't happy with the manufacturer's stores.
COSTA MESA, Calif. (AP) -- Few people took notice when Sony Electronics Inc. opened a tiny storefront last year here at South Coast Plaza, a swanky mall south of Los Angeles.
As it turns out, the small store would represent a big change in how Sony sells its televisions, DVD players and other gear.
Since opening its first store last year, Sony has quietly opened stores in seven other cities. The Japanese giant will open in its 11th and 12th U.S. stores this month, in Denver and Las Vegas, and expects to have about 30 Sony Style stores in the United States by April 2006.
Some retailers that sell Sony products worry they will lose sales. They also worry that if the stores are successful, other manufacturers will open stores, too.
"We're going to watch very closely what they do with these stores," said Tom Campbell, vice president of Ken Cranes Home Electronics Inc., a chain of eight stores in Southern California. "The manufacturer is becoming a potential competitor."
Apple Computer Inc. has opened 84 stores nationwide since 2001. Dell Inc. has its own kiosks, but neither depends much on other retailers to sell product -- at least not to the extent that Sony, Panasonic Consumer Electronics Co. or Samsung Electronics America Inc. do.
Abt Electronics, which has a large store near Chicago, isn't hiding its displeasure.
"We want our vendor to be a vendor, not a retail competitor," said Mike Abt, president of the company's Internet unit.
Caters to women
Sony is moving into ritzy shopping malls based on a widely held belief that conventional electronics stores do a lousy job with women. Its storefronts sit next to Tiffany, Louis Vuitton, Sephora and other boutiques that appeal to women -- a stark contrast to the big-box electronics stores in strip malls.
Dennis Syracuse, vice president of Sony Style Retail, crashed a Tupperware party as part of his research to watch how women shop. His conclusion: Women do more homework than men.
At every Sony store a "concierge desk" greets shoppers, because company research suggested the feature appeals to women. The aisles are wide enough for strollers. Televisions are perched on different stands, instead of lined in rows at the same height, to give shoppers a better sense of how they will look in their living rooms.
Syracuse, 56, worked for years in women's fashion, where it's common for manufacturers to have hundreds of their own stores even as they sell to department stores. By contrast, it's rare for an electronics company to set up shop next to its retailers.
The Sony boutiques are a departure from two large stores the company runs in New York and San Francisco. Sony closed a big store on Chicago's Michigan Avenue this year.
Sony says it hasn't been hawking bargains, and comparison shopping around Costa Mesa confirms that. Prices at its closest competitors were strikingly similar, although Sony sold a 42-inch plasma TV for $8,000 -- $250 more than a Circuit City eight miles away. Best Buy matched Sony on two plasma TVs; one DVD player was $10 more while another was $10 less.
Sony's store carried a few gadgets that weren't sold at Best Buy or Circuit City, including its new 20-gigabyte $400 digital music player, Sony's answer to Apple's iPod, and its latest lightweight Vaio laptop for $3,000.
Sony has yet to show, though, that it can master the mechanics of retail in the United States, such as making money off warranties and installation, but it may prove more adept than traditional chains at explaining certain products to consumers, Fenn said.
Sony's stores probably won't hurt Best Buy and other huge retailers, but they may harm smaller chains, he said. Representatives of Best Buy and Circuit City Stores Inc. declined to comment.