There’s a philosophy many companies seem to adopt when they start to struggle. They try to “SAVE MONEY” and not try to “MAKE MONEY”. They are looking for vey short term profit gains instead of long term business plan. Every company I know of that does this eventually failed.
Well, it’s usually bad or no planning that leads up to this point. Not paying attention to your competition for years and suddenly realizing they are eating your lunch. Then the death spiral begins. There is no money to invest in the business so cost cutting is all that is left. Customers are not fooled for long and they stop buying. It’s almost too late at that point unless you find an investor willing to pump money into it AND you have a proper plan for recovery. Most of the time at this point, if you stop to look around, the tidy bowl man is in his boat behind you…
The parts stores with the single o-ring can’t survive anymore. Knew a guy that inherited a plumbing store. His biggest issue was people coming in for sub dollar parts but buying big ticket items from stores he couldn’t compete against on price. Everybody bemoans the loss but it is inevitable. Businesses change and grow or die…
I still like going to the places where you can buy one nut, bolt, washer, etc. Yes, you do pay quite a bit more than buying in a pack or bulk but what if you only need one and KNOW you will only ever need one? Often I get grade 8 or stainless as well. Then there are things like deck screws. You pretty much can’t sell me a big enough pack unless it is a 5 gallon bucket full of them which I have actually seen…
When I started my company dealing in computers/electronics, I actually sold quite a bit of stuff. There was NO WAY I could compete on price with the big stores. People would tell me that my used systems were the same price as a new one from Wal-Mart. Now a lot of my used units were actually better than new fro Wal-Mart but it is hard to convince price-shopping customers of this. One thing the big stores don’t offer is service. The average person can buy a computer but can’t set it up. That is what I do most of the time now and market this as well. I often take customers to one of the big stores and pick out a decent computer and then set it up for them and move their old information over, etc.
This is why I see the move to cutting service and installing mostly self-checkouts as a bad thing. The stores are now competing on price and throwing all service or knowledge of employees by the wayside. I rarely set foot inside Wal-Mart anymore. I get so frustrated and would now rather just order it off Amazon and wait for a couple days. If you are trying to compete against Amazon but don’t offer any kind of service, then why not just go online and buy things? That is my attitude. Again, this is a short-term solution if you ask me.
I once had a guy call me on a Sunday afternoon wanting a certain cable. I was right in town eating lunch with my girlfriend but took the call. I told him I had the cable in my car and was right in town so he could come get it for $10 right now. He was like “I can get it for $3 on Amazon.” I told him that was fine but he wanted the cable right now and wanted me to price match Amazon. I was like “I am eating lunch with my girlfriend. I will gladly walk out and sell you the cable real quick $10 as I have one in the car and you can have your problem solved today on a Sunday afternoon when no one else is open and you can’t get a cable from Amazon in 15 minutes. Or you can buy online for $3 and wait.” He really wanted the cable but was set on that $3 price. I told him to just go ahead and order off Amazon and I guess that is what he did. You don’t make money off people like this. You make money offering something no one else can offer such as having the part available on Sunday when no one else is open. You also make money installing that $3 part for those who don’t know how. Just selling something cheap seems like a race to the bottom if you ask me.
I constantly evolve my business to match what people need/want. I also have evolved to attract people who are willing to pay for extra service and run off those who will just become a headache or end up costing me money. My business was recently voted the best of its category by readers of the local newspaper so this seems to be working for me.
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Or good planning for malignant outcomes. I don’t think it much of a coincidence that the CEO wants to buy Kenmore now that he’s devalued Kenmore to almost nothing. It’s classic vulture capitalism.
I agree but the fundamental problem started before this guy came into the picture. He’s just capitalizing off the situation that was created by his predecessors. Not condoning the situation by any means…
Agreed. I just don’t think they were doomed when he took over. A CEO that didn’t want to feast on the bones could have turned them around.
I mean, really, they’d spent over 100 years perfecting the mail-order thing. They were Amazon long before Amazon came along. Literally all they needed to do was to put their catalog online and let people order over the internet.
If they’d done that, I might have done my last brake job with Craftsman sockets because they wouldn’t have killed quality in order to prolong their decline. 
A town two towns over from where I live with a population of about 20,000 people there are easily 4 small independent computer stores. Most have been around for over 10 years.
I bet they don’t try to compete on price with Wal-Mart and similar. They are likely selling services and not products or are differentiating their products to sell to a more discerning customer. There is no way I can really a beat a big box store when it comes to price. You have to go at it a different way. I routinely setup systems bought at big box stores. I make barely any, if any, money selling actual products. All my profits are in the service so I don’t really care if they get the product from me or somewhere else for cheaper.
We have at least 4 such services in a town of about 20,000 as well. There are two that more focus on businesses and higher end residential customers and then two that cater to cheap. One of the cheap ones is a complete ripoff artist. The other means well but I don’t see how the business model will work. He takes refurb computers and sells them super cheap. I think he may have some decent deals in there but I he has no money to advertise and constantly has to deal with price-point customers.
We also have a Fastenal store here in town when it comes to tools and odd parts. Sure, they are expensive but fill a niche that the Lowes almost directly behind it does not. The farm stores are somewhere in the middle. They don’t have quite the selection but the prices aren’t as high either.
I buy my servers from them. Last server I bought I sat down with the owner and told him my requirements. Together we then choose the components to be used. They built it in 3 days.
Could be the reason they survive is the high concentration of engineers in NH and MA as compared to the rest of the country.
I view a server as a specialty product and you don’t just go to a big box store and buy one. You are also more dealing with commercial users and not the person looking for the absolute cheapest price such as a Black Friday disposable laptop.
A commercial user, whether it be computers or tools, realizes that lost time is lost money. Would you use Harbor Freight or Snap On if you ran a repair shop? The same holds true for computers. The price of one system going down for a day could cost more than the original price of that system. Now you could argue that with a Harbor Freight now open in my town, that one could just go get another tool in a few minutes if something broke. I am guilty of spending too much time and money in HF myself now that I have to drive past it each day. I feel that some of the stuff there is a good value for what it costs and its intended use while other stuff is just cheap junk.
There are exceptions to the rule with everybody. Some commercial customers just buy based on price like the average consumer. I have my pricing scale set so that I don’t even have to deal with most of these people. It is best to get customers that appreciate quality and service in the value of something, not just the lowest price. You sometimes get stuck with these types when something breaks and they need it fixed right now but constantly fight your suggestions as to how to do it right because that costs money.
Just like parts stores that can’t stay in business selling a 5 cent o-ring or nut, I can’t stay in business selling $3 cables and such. I do but the price is usually combined with the service of installation. I have no intention of trying to price match Amazon on little parts like this because there is NO WAY it would be a good business model unless I wanted to spiral down the drain.
I agree - you can’t compete with Wallmart or Amazon. I buy laptops from Amazon. The local store prices are too high and Wallmart carries nothing in the performance range I need.
But these PC shops have a nice niche market. They have a few local business accounts, but most are just consumers. And the bulk of the consumers are gamers who want a high-end system. I was in this store called MicroSeconds last month when this gamer was picking up the system they built for him. The price was north of $4,000.
Yes, I think we all agree that smaller shops, no matter the industry, need to cater to a niche that the big guys don’t and likely never will.
I can only imagine the types of customers that “off price” retailers have to deal with sometimes. I bet Harbor Freight for example has to deal with a lot more drama than Fastenal. For example, I never go into a Harbor Freight without a 20% off coupon and a coupon for some free item. You NEVER expect to pay full price at places like this.