hhgregg all but Exits Car AV

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hhgregg has all but pulled out of the car audio category, as the 157-store Indianapolis chain continues its rapid expansion to over 170 locations.

A spokesman noted that the company still sells some 12-volt SKUs and is still “very active in GPS.”

A visit to hhgregg.com shows only 2 car audio SKUs: a Kenwood powered tube subwoofer and a Kenwood CD receiver/speaker package. A call to several store locations also revealed only a couple of products stocked at each store.

The chain decided to decrease its presence in car audio when it began expanding storefronts, as the cost of 12-volt display boards in each new store could not be justified by sales in car electronics, said a source close to hhgregg. Additionally, the chain stopped installing car electronics about 2 years ago, and the category was difficult to support without installation, he added.

When asked which products replaced car electronics, the hhgregg spokesman noted that the chain has recently increased its notebook and laptop computer selection. It also entered the video game category 2 years ago and is now rolling out Verizon Wireless kiosks to the stores.

In its fiscal 2010, the chain opened 21 net new stores and plans to open 40 to 45 in fiscal 2011. The $1.5 billion retailer operates stores in Alabama, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Mississippi, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee and Virginia.

Source: CEoutlook

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  1. H.H.Gregg is a lot like most other big box retailers (they really remind me of Campo, another fast expansion retailer who later crashed a few years back) when it comes to choosing their categories to support. Their management should do better preliminary research and be prepared to choose a category to invest in and support it. It seems in this case they should have realized they were not able to put all of the needed investments into place and just walked away knowing they made the right decision for them. Instead this time they failed to dedicate to their choice with all that is required to make it work and be a winner up front. The decision should have been either put in the displays, installation bays and staff needed to be a destination for a positive experience or stay out of the business. Instead they have one foot on the dock and one in the boat and they just have not realized they are about to plunge into the water because of their indecisiveness. Their decision to exit the car audio installation category was the real end to their sales volume in the car audio category; it should have been their end to the category at the same time. Years ago Sears ran with this same formula of selling just the head unit products in car audio and let the local car audio specialist do the installation work for the customer. It did not work for them either(and they had the financing money from Sears credit card charges to gain from the sales) after just about 18 months they realized this was not the correct retail model for car audio for them. In the end they dropped the category and so will Gregg soon enough.
    Like Sears years ago once they left the installation to other actual car audio shops to do they soon found out they could not make a profit in this category with this go to market plan. They were left to only offer shoppers lower prices as possible incentives to bring the consumers attention to their stores. Sears made little to no profit on the product, had large defective returns and even larger returns from consumers who returned goods for no reason other than local shops installing the product offered to match or beat the unit price to get the entire installation with the needed profitable accessories (wires, dash kits, harnesses, etc)added on. Any custom installer who has a consumer come in with a piece of product for installation from H.H.Gregg just charges the customer a higher price for the labor (and makes the profit on harness, adapters, wire etc). Most of these dealers will actually do the customer the same favor and turn the customer around to return the gear to H.H.Gregg, and buy it from their shop instead for a better overall package/installed price. The consumer now gets a warranty, support and installation with just one place to handle it all if they have a problem versus the creation of a “they did it, not us” issue when a service or installation problem occurs from time to time with two separate places selling it and installing it. What kind of consumer wants to go back and forth from place to place to get his car stereo fixed or a warranty issue resolved? Oh and by the way how about the returns that come from selling a car stereo product that has to be installed in today’s complicated car electrical systems by the consumer. Do you really want to deal with consumers who say “they installed it right but it just does not work”? It seems to me H.H.Gregg should have been asking themselves who do we really need to look out for in competition when we are willing to do this to ourselves. The actual sad part is seeing products and product space in their store wasted on a half hearted effort at a category. Does H.H.Gregg even look at the consumers purchase experience that they will have to go through? This is going to be a negative experience for the consumer. You are going to create unhappy consumers who tell others about how bad their effort to buy a car stereo turned out when they purchased it from H.H. Gregg. This will just never make a customer feel taken care of. H.H.Gregg is not thinking this customer relation nightmare through.
    It’s too bad management at H.H.Gregg does not learn from others mistakes like Sears and Campo. It is very costly to reinvest in new car audio displays to re-enter a category your company left just a few years back when you first left car audio for mattresses I believe. By the way most of the local car audio dealers still have those large displays that you got rid of that time and they are still using them. Will you be dumping all of these much smaller displays again this time? I am sure some of the smaller independent dealers would like to pick one up for near nothing again. Some bad business decisions hurt your profits and really do help your competitors. Some of H.H. Greggs actually help the competitors even more by saving them the need to buy new displays for another 5-8 years.
    There are plenty of much stronger categories that are seeing healthy growth in their business now and well into the future to add to your mix. Doing car audio without installation is a race to zero profit, zero customer satisfaction, and zero return on your store square footage investment.
    This sounds like good news to your competition and bad news to anyone looking at your future profit potential based on your current management skills.

  2. Between whored out products by manufacturers who don’t want to stand up and fight for their dealer base, lack of professional technicians, and a lack of a trained sales staff, they made the right decision.

    I wish them luck.

  3. HHGREG is kicking butt. A few car guys I know have gone to work for them. I think this should be a wake up call for us to continue to re-invent and grow in knowledge. Staying current with the latest and greatest. Making our claim to the marketplace. I think all the magazines say to make our stores look a little nicer like a box store. But, may we NEVER loose our edge! We are specialists and experts in our field! Stay profitable, pay attention to these monsters and trends in the industry. SURVIVE, DIVIDE, CONQUER, AND WE WILL EAT WELL AGAIN!

  4. Mass merchants and chains generally seek the low hanging fruit. This should bode well for the independent specialist. But in the case of car audio, there is no well articulated and well communicated message that would compel a consumer to seek us out. They don’t know what we do, what we sell, or why they need it. How can any industry survive on this type of LACK of message?

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