Special Feature by Claire Reilly
In August last year, Samsung opened its first direct-to-consumer store on George Street in Sydney’s CBD, less than one block from major rival Apple. At the time this was a one-of-a-kind concept for Samsung in Australia — it was soon followed by a larger experience store in Melbourne’s Highpoint shopping centre in March this year.
Sony has also changed its selling strategy on the east coast by closing its New South Wales Sony Centres to begin the rollout of in-mall kiosks. Using its northern-Sydney Chatswood shopfront as a template, Sony opened a new kiosk in the western Sydney Westfield Parramatta last month.
In-mall kiosks are very fashionable at the moment. Acer launched two consumer-facing stands in late 2012 and Nespresso plans on showcasing its coffee machines inside Westfield shopping centres during mid-2013. Neither of these brands will be selling on the stand.
“We provide a lot of the marketing material for the retailers, but we put up the stand here so people can actually have the expertise of our staff to explain the key user benefits of our products,” explained Acer GM of marketing David Sunton. “If a brand has a significant presence and can offer improved product experience and customer experience, then I think they should."
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Sony and Samsung, however, do sell on their stands, albeit at RRP and only a narrow product range. Views are divided on what these direct-to-consumer propositions mean for the industry. Suppliers insist it is a great way to market a brand experience without threatening traditional retailers. The retailers are understandably cautious about another competitor entering an already tough marketplace.
Samsung Australia vice president of telecommunications, Tyler McGee, defended the opening of Samsung’s experience stores, saying they complement the product offering of Samsung’s retail partners.
“We have really strong partners out there already, so from our perspective we’re enhancing what they do and working with them on delivering the same experience that we deliver in our stores into their store footprints.
“At the end of the day it’s about giving consumers an experience with our devices and how they work together. If they come and learn about their device here and then go buy it from a JB Hi-Fi, I’m happy.”
The ‘experiential’ message is one being echoed by Sony Australia’s general manager of consumer sales, Jeremy Senior, who said kiosks were a way to showcase the full Sony range, without trying to battle it out with retailers on cheapest price.
“Sony kiosks provide consumers with the opportunity to get hands on with our product in a high traffic area,” said Senior. “It also enables us to display product categories next to each other, which isn’t always possible in our retail partners.
“Price isn’t our key messaging,” he added. “We know from experience…that consumers are engaging with our kiosks, understanding the products and buying them elsewhere, and we’re happy for that to happen.”
But for all the positive messaging coming from the major brands, what do retailers have to say about seeing suppliers pop up around the corner from their stores?
Ben McIntosh, Harvey Norman’s general manager of computers, said he was “obviously not thrilled” with the idea of suppliers going direct, but that it was now a fact of life.
“I wouldn’t say we’re happy,” said McIntosh. “But we also don’t see it as a major threat, because we strongly believe that customers want to see range and products that suit their needs, not just the one brand.
“If you’re good partners with someone then you should be able to work together no matter what, and that’s the way it currently is with all the major brands with Harvey Norman. When you’re in this position, you dig deep into your partnership and make sure there is room for both, and I think we’ve got that happy medium at the moment.
“Thus far the brands have been quite responsible by not leading a price war.”
One thing that suppliers and retailers seem to agree on is that the lessons learnt in direct-to-consumer stores can help improve the customer experience in retail.
“We’re learning every day through this retail experience, and whatever we learn, we share with our partners,” said McGee. “Hopefully it’s making the consumer experience in their store as great as it can be.”
And the retailer perspective?
“We are very good partners with both Sony and Samsung and we do discuss their experiences in their stores, what’s going well for them and what isn’t,” said McIntosh. “With their partners, they are open book and we do learn.”
As an added bonus, McIntosh said suppliers may learn a thing or two about bringing products to retail through the process. Suppliers that better understand retailers? That can only be a good thing.