Distributors are Seeking a Riposte to Falling Sales of High-tech Products

While sales of TVs, PCs, GPS or cameras are plummeting, traditional retailers are trying to develop e-commerce strategies to capitalise on opportunities offered by selective distribution.

The small appliances (“brown goods”) segment of the consumer electronics market is in free fall –having experienced a 24.6% decline in sales of TV sets in January and February 2012 alone, compared to the same period in 2011. Prices are also down; while the effect on turnover has been stunning, reaching -32.4%. The trend is the same for cameras, GPS and stereos. In fact, the only products that sell well are smartphones and digital tablets – but these products are widely sold by phone operators or over Apple’s own proprietary network, thus evading traditional distribution channels.

Traditional distributors are embarking upon parallel distribution online but they are also counting on the EU regulation in force since 1 June 2010 to develop the concept of selective distribution. Manufacturers may thus require their distributors to maintain a physical outlet presence. The objective: to promote the presentation of products, the dissemination of appropriate advice and help customers to try out the products.

At the time, some pure players had cried foul against the operation of manufacturers, claiming that they were aiming to circumvent them. For traditional retailers, this is an exaggeration on the part of those who had “contributed to impoverishing the sector. To have a store, a sales team and especially a customer service worthy of the name, all this comes at a cost – we cannot slaughter the prices as they do”, says a distributor to the French paper Les Echos.