Disaster looms for CE industry if prices don’t stop falling

By Patrick Avenell

SYDNEY: The managing director of a boutique consumer electronics store has gone on the record today saying price fixing is the only way to stop price erosion and keep retailing profitable.

John Messer, who runs Blackwood Sound in South Australia, knows this is an unlikely proposition, and he expects it to be “shot down in flames”, but he thinks that without a united front in the war against falling margins, all suppliers and retailers are set to suffer.

“The entire Consumer Electronic Industry is infected with a culture of selling on price, and it’s costing us dearly,” said Messer. “I have been in the Industry for 37 years and nothing much has changed – every time a new product emerges that everyone wants, we choose to give it away, will we ever learn?”

The answer for Messer is to lobby the ACCC for price minimum allowances. He thinks this will lead to more a realistic perception of product value for consumers, and greater margins for suppliers and retailers to work with.

“I believe it should be possible to set a reasonable industry minimum margin that allows all parties to keep the bills paid and allow for proper product support. This is in the best interests of the consumer, the retailer and the supplier.

“A minimum retail price would probably end up being the ‘go price’, but everyone would be
protected, even the incompetent who regularly burn consumers and suppliers alike.”

Although Messer stands by his belief that something must be done to stop price erosion, he accepts his idea might be considered laughable at best and illegal at worst – but he accepts this criticism.

“I can hear everybody saying ‘It will never happen’, but, hey, there’s an African American President in the US, so surely anything is possible.

“Five minutes ago, what the banks and stockmarkets did was the ‘right way’, and we know where that led us. Maybe the consumer electronics industry is heading for a similar crash, and I feel we
need to take steps now to prevent it.”

Do you agree with John Messer? Is the CE industry heading for a crash? Send me an email.

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