On Dealers and Discounts

To Ken Kessler,

I read your article about hi-fi shops possibly closing. It is indeed sad, but I disagree completely with your attack on consumers shopping for a discount. I demoed speakers locally in the United States and then saw that purchasing them from the UK would lead to a savings of nearly $1k. This wasn’t from a sleazy discounter, but from a reputable shop that I found via a manufacturer’s dealer listing.

I would happily try to work with the local dealer, but they wouldn’t budge on price.

Why is that my problem as a customer? It is the job of the manufacturer to set pricing and ensure all authorized dealers price evenly aside from special promotions.

Ultimately, if you lose a customer on only price you have failed as a dealer. Clearly the customer walked out and decided the service wasn’t worth it. This can only go so far though.

If you demoed speakers at your local dealer who wanted $2.5k and then another dealer offered them for $1.5k, is it really not enough? Ironically, this was also a small local shop in Scotland.

Name withheld upon request
United States

Thanks for your e-mail. I will try to answer this as calmly as I can!

I don’t know where you get your information, but manufacturers DO set recommended retail prices. The problem is that they are unenforceable by law. The worst thing that ever happened to hi-fi and to retailers was the abolishing of retail price maintenance. There was a level playing field -- you pitched retailer against retailer according to the service they delivered.

You cannot expect global price parity on imports. British products should cost more in the US than they do in the home market and vice versa, because they have to travel, they have to be subjected to local taxes and to import duties, and there is an extra margin in the form of the importer or distributor.

It Is naive to think otherwise. Moreover, I don’t understand why you and others expect retailers to work without making any reasonable profit. Ask the dealer “who wouldn’t budge” about his overheads including rent, wages, local business rates, taxes, and other concerns. Then ask him what the markup on hi-fi is compared to, say, watches. You would be shocked.

The bottom line is really about people wanting a deal so they can buy stuff they can’t otherwise afford. I guess I was brought up differently and not to think in terms of entitlement, which is what demanding or expecting a discount really is. I don’t know what line of business you are in, but I don’t think you would be too happy as a hi-fi retailer. They struggle enough without giving away their profits. . . . Ken Kessler