With audio and video stores becoming scarcer and scarcer, the question is fast becoming, is there any future at all for retailers and manufacturers of higher end A/V gear?
“I don’t know, I’m concerned,” says John Kiefer, practically the last man standing out of what once were scores of Kansas City and Lawrence area electronics retailers. “Look at who lost money last year, Sony. For 60 some odd years Sony was profitable and they lost money last year. I’m questioning if there is a future.”
The problem in part being younger people no longer seem interested in pouring money into higher end audio equipment. They prefer gadgets.
“There’s no motive for manufacturers to build upscale audio,” Kiefer says. “The people who come in to buy upscale audio today are really rich people, but even they don’t want to spend that much money because they’ve been on the internet and seen lower prices. And in order to make the economy strong again, we have to to start taxing the internet.”
That’s where demise of audio, video and music stores started, Kiefer says.
“It all ended when the computer came along,” he says. “It made the average guy sitting there with his dummy machine think that he had all the answers. People come in now and tell us. We’ve become the best data collecting society that doesn’t know a damn thing about what they are talking about.
“A guy came in yesterday and said, ‘I want to buy a Yamaha soundbar.’ It wasn’t even out but he thinks it is and he said, ‘Oh no, it’s out.’ But you can’t buy something that doesn’t exist yet.”
As for the future, “There won’t be a future without profit,” Kiefer says. “I have a prediction, but I don’t know if I’m right. Here’s my prediction:
“Take Yamaha. They make entry level products, mid level products, performance level products and high performance, state-of-the-art products. And those levels are all priced accordingly. It’s like grade school level basketball, high school level, college level and pros.
“And people will look at the high performance models but say, “I don’t want to pay that much’ and they rationalize buying the lower tier models. But they get what they paid for – they don’t get anything – they get just what they paid for.”
Now a little local A/V history…
“Brandsmart put David Beatty Stereo out of business,” Kiefer says. Because it got lines like Yamaha that formerly were exclusive to Beatty. And Nebraska Furniture Mart and Ultimate put Brandsmart out of business. And it wasn’t just Yamaha – it was audio – because the Japanese wanted growth.
“When Brandsmart got Yamaha – Beatty used to sell it at a 40 percent margin – I know, I was carrying Yamaha here in Lawrence then. Then Brandsmart set the margin at 28 percent and Beatty lost so much business that he switched to Denon. And Denon was good, it was as good as Yamaha. So then, what was the next line Brandsmart went after? Denon.
“Pretty soon Beatty was pretty much left only with McIntosh and B&O. But the more upscale you go, the lower the volume and there wasn’t enough volume to support the store so Beatty went out of business.”
Does anybody much today have any kind of desire for higher end audio?
“Yeah, they want it, but it can’t get above a certain price,” Kiefer says. “So here’s the question; how do you build something if you can’t sell it at a profit? Why would you? You won’t. You’ll stop building.”
With mid level A/V retailer Best Buy earnings down 20 to 25 percent – its frisky founder backing away from his recent attempts to buy back the company – Radio Shack hemorrhaging red ink bucks and Circuit City and Ultimate Electronics dead and buried, the outlook is beyond bleak.
Kiefer’s bottom line?
“There are roughly 18 million people in the New York area and there’s three retail stores like Kief’s,” he says. “I would say if there’s two million or more people in an area, there’ll be one real, upscale audio store. And if there’s four million people, there’ll be two.”
How about cities with populations of a half million to a million?
“Probably no one,” Kiefer says. “Maybe a midlevel store like us. Although we do have a few high end items and can order them.”