Circuit City Unleashes Home Integration Services
From the early reports, it looks like Firedog reps will install both computer and home entertainment gear, focusing on complete solutions, such as integrating a media center PC, flat-panel TV, music system with a wireless network. The Firedog strategy not only nips at Geek Squad but also at Magnolia, Best Buy's higher-end home theater sales and installation division. That also puts pressure on small, independent IT integrators and home AV installers. "Circuit City will be the first national brand to offer a one-stop shop for all the digital needs of a home," Business Week quoted Circuit City CEO Philip Schoonover as saying.
Transitioning to a widespread services model is tough for any company, so it's much too early to tell if Circuit City can pull it off. But it looks like the company has the right idea. Offering fully-integrated service - including computer hardware, IP-based wired and wireless networking, and entertainment gear - is a smart play and one we've been touting to independent digital integrators/solutions providers for years. Why the Geek Squad has yet to combine the networking and entertainment pieces is beyond us.
Like integrators who developed similar models years ago, Circuit City realized there was a huge customer demand for integrated solutions. For example, the big-box retailer's sale of flat-panel TVs topped 100% in last six quarters, doubling its market share to 28%, Business Week reported. Needless to say, those sales dramatically jacked up service calls for TV installation and PC services. Circuit City logged 7,000 service calls on July 29, 2005. That number skyrocketed to 500,000 deals on July 29 this year, Business Week notes.
The point should not be lost on smaller integrators: lead with something useful, sexy and enviable and product add-ons, upgrades and high-margin services will follow. Although prices of flat-panel displays, and other commoditized products, keep falling, most smart integrators and AV installers realize how much service is involved in helping customers choose, mount, wire, optimize and integrate them. That fact is not lost on Circuit City, Best Buy and the all other retailers that will soon add higher-level services to their offerings.
Circuit City's move means several things to digital integrators, mainly more competition. If you let this dog lie, you'll get bit. Whether we're talking about middle-class or high-end customers, Circuit City has the marketing dollars to reach them and the volume-pricing to entice them. With that said, digital integrators can fight back by providing current and potential clients with something the big boys can't: well-honed, personalized customer service; immediate response; remote, managed services; regular face-to-face meetings; long-standing community roots; trusted advisory, consultative and training services; flexible pricing; and full, vendor-agnostic solutions. That strategy has worked for commercial solution providers against Dell and it will continue to work against other Goliaths in different markets.
In terms of pricing, more vendors (NEC Display Solutions, Westinghouse Digital, Intel, LG, Linksys to name a few) are looking for solution provider partners to drive more of their display and networking products through corporate accounts and into the home, and vice versa. Many of them offer employee discounts and special reseller pricing (NEC Display, for one, has a well-defined program). Before you approach a vendor for help, make sure to have a well-written proposal on how your strategies will help the vendor increase sales, beat their competitors and gain new, satisfied customers. If the vendor won't help, there are plenty others that will.
Stay tune for more on Firedog. Meanwhile, show potential clients how you can treat them better than big-box and online retailers ever will.
Contact Jeff O'Heir at [email protected] or 516-562-7485 with any thoughts or strategies on how you're increasing the competitive edge.