Did you explain that to the dealer?
Did you explain that to the dealer?
Alan A. Shaw
Harbeth Audio UK
The first time I heard the SHL5, I was shopping. Like a lot of people looking for a new pair of speakers, I auditionned many ones in a lot of differents stores. Then, I went to the second and last store to carry Harbeth line in Montreal. I wanted to compared them with a similar design from Spendor. As I better enjoy the Harbeth, I ask the dealer if he can make me a deal on the demo pair. He was ready to do so. The fact is that the demo had a crack in the veneer and he wanted to sold me that pair $1000 more than what I can pay for a used pair in better condition! Unfortunately for him, I was willing and more than ready to buy there but at a reasonable price. I explain all of this to the dealer.
I know Alan, you'll probably talk to me about warranty, but I trust your product and I trust sellers with a lot of positive feed-back and good communication. You'll suggest me to encourage my dealer, what I've done for many things in the past, but not this time.
Last but not least, a dealer told me once that he sells to 1 person on 10 entering the store. We're on our right to visit, audition, discuss and buy where we want to. I feel "ok" to did what I've done.
But let's be frank about one thing. You report that the dealer said to you "he sells to 1 person on 10 entering the store". But this statistic can be - and must be - flipped over and looked at from the other side. No business person in any line of business would voluntarily invest his time and energy day after day after day entertaining nine people for every one that actually spends money. The dealer's rental costs, insurance, heating, wages, lighting etc. etc. are fixed. That means that the one person in ten who is buying is paying for the entertainment (I mean, the free auditions) for the nine others.
I'm not quite sure in my own mind who is the chicken and who the egg in this scenario. Standard professional sales training teaches salesmen to weed-out the browsing customers from the ones who are willing and able to pay; are dealers allowing the 9/10 members of the public to take advantage of their goodwill because they don't properly profile their visitors?
If I myself ran a retail store - let's say a shoe shop - and every day dozens of customers asked me to spend time running around letting them try this shoe then that yet only one in ten bought, not only would I be exhausted at the end of the day and going home worried about covering my outgoings, but my self esteem would hit rock bottom after a week. It would take a superhuman dealer to soldier on in such circumstances. Dealers are not a free circus; they are professional people who have dedicated their life to providing a service, learning all there is to know about audio for the benefit of their (paying) customers.
Surely the ratio of browsers:buyers can't be 9:1 - can it? That just cannot make any business logic and can't be sustainable. Who benefits when specialist audio dealers have all been drive out of business?
Alan A. Shaw
Harbeth Audio UK
Good heavens. Only a masochist would become an audio retailer then. Any meagre profit that they make must be extremely hard-won. Who would put themselves in that position day after day and remain sane?
Thinking back over the dealers I met during my recent far east tour, every one of them cheerfully goes the extra mile for his customers. Every one of those dealers has a fuzzy differentiation between his work life and his day life so that, regardless of the time of day, he is able and willing to be open and available for customers. Unlike, say, the legal, dental or accounting professions who also provide a service to the public, an audio dealer can't close the door and go home at 5pm. Unlike other professionals he can't charge his time with the visitor at an hourly rate - he funds his entire operation from the margin that we, the manufacturer, grants him and if he is very lucky will be able to draw a modest salary.
At best, in a good year when the economy is buoyant, the real, physical audio retailer's take home pay after outlaying for his store and overheads will be a tiny fraction of an accountant's or dentist's income who generate an income from 10/10 clients not the audio dealers 1/10.
As a manufacturer, I would never, ever swap places with an audio retailer. Audio retailing is extremely hard work, and I salute anyone who has the self-confidence and the tenacity to take on that role in society for such small reward.
Alan A. Shaw
Harbeth Audio UK
But there are other business models: direct sales, for example. I can think of a fair number of credible speaker companies who have chosen to go this route. There are both benefits and costs/risks to producer and consumer, but it can work. The benefit (potentially) is better margins to the producer and lower cost to the consumer. The risk is buying something unsatisfactory without audition, but in most cases this is mitigated by a return policy.
I know Harbeth isn't likely to go this route. But it could, with the reputation that it has. Whatever the benefits a good dealer can provide, the reality is that Harbeth is not a widely distributed product in many markets, and many buyers take the plunge simply on the basis of the brand's reputation (which includes comments on the HUG). Direct internet sales would not change this.
It is an interesting exchange. I respect you as I am interested in your product even if I'll buy it from a different form than the official retailer one. You are open to hear my point.
I'll react to some comments above. Yes, an audio dealer in Montreal already told me that he sales to 1 person on 10 entering the store. By local audio forum and friends who enjoy music, I know that here in Quebec we shop for the new product we want.
When I was a student, I worked in an outdoor store and we had a lot of people coming by just to take a look, try some things but never buy. It looks normal to me when you shop for a $100 product and more if it's a $5000 one! When the marging you get can be counted in hundreds of dollars, the income goes up fast! Hi-fi audio are luxury products.
On the side of the retailer, I can ensure you that the vast majority of dealer here in Montreal are well being. They make more than a normal pay. Audio industry goes well. New store open each year. Montreal is know for being a great market for hi-fi.
As I am critic of that and I assume that the "1 on 10" was one dealer reality, I'll be glad to know serious study who can tell us more. It can be also interesting to have "Hi-Fi Dave" opinion on the question.
It could be that Montreal has a unique demand/supply situation. But looking across the entire 40+ markets that we serve from Harbeth UK, and my face to face meetings with dealers around the world, I'd say that the general picture is not good for them. There are three problems that I hear very often:
- The ever-increasing costs of operating a retail store - rent, insurance, heating, electricity, staff costs, local taxes - it's a never ending drain. And all of these overhead costs increase year on year regardless of whether there is one or one thousand customers.
- Cultural changes whereby consumers, especially younger ones, prefer to buy AV products (incl. computers) and almost never visit a specialist audio dealer
- On-line 'virtual' dealers who operate with almost zero overheads but who cannot demonstrate any product but who have a significant cost advantage.
I am not aware of any dealer anywhere on earth who is making the same income as five years ago, and certainly much less than ten or fifteen years ago. If you visit many of the long-established stores they are crying-out for refurbishment but there just isn't the money to even give the store a lick of paint.
Maybe Montreal is a special case, but I can assure you that it is not representative of the global picture. I just cannot imagine what sort of business argument one of those new start-up dealers you mention could make to their bank faced with 1, 2 and 3 above. Our local bank manager is provided by his head office with industry-by-industry risk assessment guidelines, and he showed me recently that the audio sector - specifically audio retailing - has one of the highest risk ratings for losing money and for defaulting on bank support. Since 2008 and the credit crisis, retailing has been a very difficult sector, globally.
And I agree, let's hear from dealers in this discussion.
Alan A. Shaw
Harbeth Audio UK
Interesting thread for sure... and while I'm not trying to discredit Alan, I believe your view of the North American audio world (and certainly in Canada !) is missing the boat on some points.
Sebastien is correct.. audio is alive and well in the Montreal area, 2 channel in particular hasn't taken it on the chin as badly as say here in Toronto. We have a population of well over 3.5 million in Toronto and the surrounding area, and yet not a handful of serious shops left .. most have failed or just closed shop to online sales or big box resellers that focus on low end/mid market dreck that tries to pass itself off as being credible... sad...
To make matters worse, I'm currently seeking to buy a NEW pair of P3's for my bedroom system, and the ONLY dealer in the city has now stopped carrying the brand ! the only "local" retailer is a 6 hour round trip drive away.. hardly a cross town run to audition and facilitate a proper sale.
So, with due respect to perhaps one of the great brands out there in providing a "real" audio product, I don't think that you're quite in touch with what some of us here in the "colonies" are up against when it comes to sourcing great gear.
At this time, the Super HL5 is £2280 in the UK, with a £200 premium for rosewood, my preferred finish. So, £2480 - VAT included. At current exchange, $3761 Canadian dollars.
The price of the rosewood Super HL5s in Canada is $6000 ($5999) plus combined sales tax (here in BC) of 12%, so $6720: almost double the UK price.
Now, obviously, someone is taking an inordinate profit on this. I understand about shipping costs, brokerage fees, duty, etc. but that's not what's responsible for this pricing. If you look at the other Harbeth prices in Canada, they're much more in line with the UK prices, with perhaps a 25% premium: about what one would expect would be required to cover the extra costs and the distributor's margin. Not nearly a 100% premium as on the Super HL5. Now, I don't expect that this is dealer markup, because the dealer is not setting the recommended retail pricing, and I know Harbeth doesn't set the pricing, so the distributor is picking it up. And the distributor is not providing me with any value: he's essentially performing an administrative function. But for that kind of markup, I can deal with the hassles of importation myself: I've done it before, and while for a couple of hundred dollars I might be prepared to let someone else have the headache, for a couple of thousand I'd just as soon do it myself.
And ... even if the main value a dealer provides is the ability to audition the product, what's better than a home audition with the ability to return if the product isn't satisfactory?
I have been selling specialist Hi-Fi for many years now. I started out in the early 70's selling specialist Hi-Fi from home and business was good. One of the reasons being that I was just about the only retailer stocking and demonstrating high quality equipment in a home environment. Almost every day was spent demonstrating equipment to eager enthusiasts and we had a successful sales rate of around 95%. I guess this continued until the mid 90's when the success rate started to decrease and up to the present day where we have a rate of approx 4 out of 10 actually buying.
Of course, over the years a dealer gets very wise to the intentions of potential customers and you can tell, even over the phone, when a customer is genuinely interested in buying or just wanting to listen. We learn to 'quality' potential customers to filter out those who just want to use the facilities but even so, sadly many prospective-customers make excuses as to why they can't buy following a demo.
Now, I really don't mind demonstrating equipment to a person who is not about to buy if he is up front and honest about his intentions. I'm an enthusiast still and like nothing better than showing the potential of the equipment I stock to pleasant, genuine people. On occasion, I have (or my staff) spent 2 or 3 complete days demonstrating equipment to potential customers only to be given a lame excuse at the end of it. Occasionally, a dem might entail me borrowing equipment at some expense to carry out the dem and this is all money wasted.
Over the years I have had various Professional people absolutely astounded that I can spend so much time giving guidance and advice without charge. I mean, you won't find a Solicitor, Doctor, Dentist, Surveyor, Interior Designer etc, giving their expertise without charge but a Hi-Fi dealer is expected to do that and keep smiling. It takes years to gain the expertise and the demonstration facilities don't come cheap, yet we are expected to provide these facilities to any and everybody who wants to listen to Hi-Fi.
I assume that if people were prepared to pay for the advice of a hi-fi specialist, i.e. if this were actually a viable business model, someone would have done it by now. But they're not (or I assume the vast majority are not), so what are you going to do? It may be their loss, but there it is. People don't pay for a solicitor's or a doctor's time because they want to - they do it if and when they have to. Not the same thing at all.
I'm not sure if I ran out of space with my previous post ( I was waffling a bit) but I was unable to finish off by saying:
I don't know what the answer is but it would be very nice if customers did appreciate the effort, time and money that a dealer spends to assist him making choices and decisions. Please don't waste your dealer's precious time unnecessarily.
I love doing what I do and thank my loyal customers past and present for all the pleasant times listening to good Hi-Fi.
As Dave says, it is extremely difficult to reliably tease out the paying customer from the casual browser. Those with money to spend are not necessarily the best dressed, the most polite, the best educated, drive the best car or have impeccable grooming. It's easy to miss the real customer amongst the browsers. And I stress - the tight margins means that all and every real customer must be served.
If you are just browsing, please do us all a big favour: tell the dealer that, upfront at the beginning of your interface with him. He'll respect you more for being honest. If he's having a quiet day, as an audio enthusiast, he'll still want to share his knowledge with you and will do his best to make time for you. If he's busy with paying customers you'll have allowed him to concentrate on selling - and in so doing, the margin he'll make on that sale will fund some more free demonstrations.
We occasionally at the factory receive calls from over-exited prospective customers. The same caller can tie us up for an hour a day going over the same micro-details. I used to take those calls, but I don't any more. This is my channel of communication. When we ask why the questions have not been directed at a dealer it's clear that they have been, but the caller has used-up all the dealer's goodwill.
If the dealer doesn't sell, he doesn't eat. Then he falls behind on his rent and closes down. Do we, as a community want to accelerate that process? Can we realistically expect quality audio to be sold by mail order to the consumers complete satisfaction? Of course not.
Support your real, physical dealer.
Alan A. Shaw
Harbeth Audio UK
I bought a good chronograph watch from the U.S. some years ago through internet order. I paid a total of 900 euros, all in, delivery at my door. I damaged the mechanism (my responsibility), and the local dealer repaired it -to his honor- like I bought it from him... He said the worldwide guarantee is valid as far as it was bought brand new and stamped from any authorized worldwide dealer. He didn't ask me about the purchase price I paid. His price, here, was (including discount for cash payment) almost double. So, I liked the American price (with cargo, taxes, etc.,) and chose it, while I also admired the excellent policy of the local dealer/distributor to keep the brand name to a very high standard, even by servicing something not sold by him. Later on I found that few companies do this. Most do not accept the guarantee of something bought from elsewhere. I still do not know why the local dealer can't sell at about the same prices like the U.S., especially when the watch is Swiss! Greece is much closer to Switzerland than the U.S.A.!!!
I don't know who's fault is, surely not mine, but I think it has to do with the mother company's commercial policy. Not that it is bad, but seems rather lacking some "regulative flexibility".
I see similarities with the issues that previous posts are examining and discussing.
But there's a limit. I assume Harbeth supplies directly to its UK dealers. When a distributor or two gets injected into the chain, however, they need to eat as well, but they are not necessarily providing value commensurate with what they cost. I imagine it's more convenient for Harbeth to supply to one distributor in a given market than to supply dealers individually, but that automatically makes Harbeths more expensive in a foreign market that has a distribution chain in between the dealer and the company.
I don't see why that's absolutely necessary in an age of near-instantaneous electronic communication (it's "online order" now, not "mail order" - moves a lot more quickly). As I see it, a distributor has two main functions: (1) he aggregates orders (good for the producer) and (2) he takes care of logistics of importation (good for the consumer). But it's all administrative, logistical, middleman-type work. The true value-added, in my humble opinion anyway, is not that great, at least from the consumer's perspective. There's surely some way to rationalize this function in a way that would reduce costs to the end user: maybe allow dealers to place orders directly with Harbeth (if they themselves don't want to carry inventory), etc. Or allow consumers to order directly from Harbeth provided they've had an approved audition with a Harbeth agent, and build in a margin for that agent/dealer. Maybe there's some other model that would work. But if someone (i.e. the distributor) is making a couple of thousand just for filling out forms, I'd rather fill them out myself.
After all, Harbeths are a great investment as audio goes, but they are a luxury good and a discretionary expenditure. At the end of the day, I don't think you want to discourage people too much from spending money on Harbeths rather than on one of the vast number of alternatives (by which I mean not necessarily competing speakers, but the near-infinite number of uses to which that money could alternatively be put).
To follow Thanos, there is a lot of paradoxes in our globalized world. Hope we can put some light on them.
Also, thanks to "Hi-Fi Dave" for some precisions. It is always a pleasure to read you.
Finally, I'll react to the last Alan's post. As a dealer, it happens that you serve a young person just coming to hear good hi-fi system or just buy a vinyl brush. Than, years later, you realize that that person comes to buy a $5000 sound system and years and years later a $30 000 one (a true story that a dealer in Montreal told me). All in all, it is customer's right to be treated with respect and equality even if they buy or not.