Tweeter Shuts Down (11-5-08)

Though no one wants competition in business, competition keeps prices down and quality up. So it is sad to see competitors fold. Tweeter looks to be no more after December 31. Circuit City is closing over 140 stores to try to stay financially solvent. The loss of these two hurts all of us as it eliminates other outlets for manufacturers, and may ultimately eliminate some manufacturers. It will also leave Best Buy as the only national full line electronic retailer, and that means a very real possibility of increased prices on their part, poorer customer service, and a very large club they can use on manufacturers to get what they want, while eliminating uncooperative manufacturers from their stores, providing fewer customer choices and less technological innovation from manufacturers with fewer manufacturers to compete in the market place.



For Upstairs Audio & Video, it is not a problem as the big box stores can never compete when it comes to mid and high end product. They can always beat us on those cheap items such as the cheap LCD sets from China, the $499 complete surround systems, and all the other products that they can buy rail car loads of from the orient, including stuff they label with their own brand. But when it comes to the better name brand equipment, they usually are the same as us, or higher. It may seem odd until you understand two things. First, they do not purchase mid and high end product at much less than we do. Typically they get 5 to maybe 10% off. They may also get some extras such as kickbacks for meeting certain sales levels, advertising money, free product, and other types of incentive programs. (Ever wonder why the sales people at some big stores insist on certain products, especially warranties? They get kickbacks-spiffs-too.) The second point is their overhead is high, very high. I would guess 10-12 times ours. With the locations they occupy, utility bills, advertising costs, layers of personnel, attorneys for lawsuits, theft, trucks, IT department, advertising department and all the other they must deal with, it is very easy to see how their overhead is far greater than ours. Which means their prices must be higher, wages low, and time spent with a customer on sales limited. It also means longer wait times for telephone information and service.



Unfortunately, the public does not see this and is easily mislead by slick advertising that appears to be low prices. Yet specialists such as Mann Tools and Hiller Hardware have similar prices, but far more knowledgeable personnel and service. They often have better selection and allow the purchase of one screw or one drill bit, rather than having to buy a package of 12 screws just to get one. Same applies to Upstairs Audio & Video and other specialists like us, who are unfortunately rapidly disappearing.



The loss of small businesses and specialists concerns me and should you too. Who do you turn to when you need advice and service? Where do the innovative manufacturers go to find people who can explain and sell their product? With the shrinking base of specialist retailers, there is a homogenizing of product, along with a frustration among consumers who cannot get product to work correctly.



It is a shame, but unless we do a better job of selecting good people to support, there will not be many good people left to support us. We reap what we sow.



Tweeter Files Shutdown Notice
By Alan Wolf -- TWICE, 11/4/2008 8:15:00 AM
Canton, Mass. — Tweeter has notified a Massachusetts state agency that it is closing its headquarters here by Dec. 31 as part of a “permanent entire company closing.”

According to a report by the Associated Press, the Massachusetts Executive Office of Labor and Workforce Development received the notification by letter on Monday.

The letter, a copy of which was obtained by TWICE, was sent by Tweeter's human resources VP R. Michael Rudman, and indicated that affected employees had also been notified of the shutdown.

The chain was sold to liquidators last Thursday, which the Boston Globe has identified as Hudson Capital Partners and Tiger Capital.