Retailers

As a follow up to the comments I made about retailers in recent posts, I would like to show that this is not a new idea or opinion from me, I wrote this below in 1994. It was publish in Inside Hi-Fi a trade magazine published by Angela Curtis (Stan Curtis's wife for those who remember him). They had a prize of a bottle of Champagne for the most interesting letter published, I did'nt get it!!

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Write Inside

Dear Angela,

Seeing it is not only you but some of your more prominent!! readers asking for more letters in your mag, I thought I would make another attempt at the bubbly. I would like to follow up on the theme of my letter of last year. That letter enticed two 'phone calls, one from Ivor Tiefenbrun explaining at great length!!! his dealer contracts. After I managed to get a word in edgeways I was told if I won't listen there is no point in trying to educate me. And one from Russ Andrews agreeing with everything I said. What this says of the industry or its view of me I will leave open for your interpretation. Apathy rules OK.

What very few people seem to understand is that the so-called cottage side of our industry is to a large extent thriving and a large number of small to medium size companies are exporting like mad. The fact that the restrictive trading practices and pure mismanagement of the retail side of the British Hi-Fi industry has nearly ruined the industry here has forced these companies to do this and in the process they have become an unrecognised British exporting success story. The following is a breakdown of my last years turnover according to country. Please do not consider our position to be unique it probably applies to 80% of UK Hi-Fi companies.

China/Hong Kong 24%
Singapore 5% Taiwan 21%
UK 4% France 12%
Greece 3% Russia 7%
Italy 2% Indonesia 7%
Holland 2% Malaysia 6%
Norway 2%

The remaining 3% split amongst another 7 countries.

When your home market takes only 4% of your turnover you can guess where my priorities lie, though this does give me the freedom to call a spade a spade as I perceive it.

There seems to have been a decision made by a number of leading manufacturers and retailers dating back to the post boom days of the late 1980's that if they were going to have to put up with a receding market place the thing to do was to get a greater share of that smaller market. Hence the poor customer walks into a major retailer these days to be faced with a choice of 4-6 manufactures and these are boringly the same manufactures shop to shop, apart from the valve propeller heads and thank God for them, they are the only spark of originality in the shops today. Well, I would like to say surely it is time for a change, as the recession is no longer with us shouldn't we try to pursue excellence again instead of short term expedience. The whole industry will benefit and the major manufacturers will have to improve their products instead of replying on lack of competition, which must be for the good. In my opinion the like of Bill Hutchinson and Julian Richer in their own very different ways are addressing this and if more independents sat back and took a good look at their businesses and break out of their complacency and looked at who is controlling them, perhaps they will join the battle of expanding the market instead of griping and complaining and acting as new age Luddites.

Richard Dunn
NVA

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Those small manufacturers largely failed when the currency crisis happened in 1997, and the industry is very much the loser for it, BUT the new generation of bodgers and cottage industy manufacturers (I wont say cottagers as I understand that means something completely different now a'days ) is growing again, support it.

Richard

 

The problem I see is that with many products, for example mine, people will not buy it unless they can hear and see it in a shop and/or try it at home.

You are then left with sale or return which can be very costly with larger items (speakers for example). Convincing people to go to that effort and cost on the strength of a website and a few user comments is very hard. If you don't offer sale or return it is harder still. Drawing attention to new products is also a problem, if one can not simply walk into a local dealer, see it there and say 'oh whats that?'.

Then you have all the usual stuff about service and so on...

But yes, dealers and distributors take a huge cut of the final sale price and going direct means things can be a lot cheaper. I think the solution is to support your local dealers, not the opposite. If the dealers had more trade they would not have to make such a mark-up on the few products they do sell to cover the rather large cost of rent, electricity, heating, staff, advertising, insurance, etc, etc...

If I were to offer free sale or return on my acoustic treatments I'm sure I would get a fair few takers... but the cost of doing that would mean the price stays at about the same level as it would be coming from a dealer. Is that where you want to be in 5 years time? No dealer, but paying the same price? Or simply not having the choice to demo, but lower prices?

By the way, most of the dealers I have been to have a great selection of stuff, each different from the next retailer. Its only Seven Oaks and Richer Sounds that have all the same stuff and what do you expect from a franchise? Commet and Curries all have the same damn kettles too...

Just my 2pence!

 

Like it or lump it, some businesses do well some do not.

The idea that a dealer would drop his prices is frankly stupid talk.

I am not unsympathetic to your issues, but one wonders what you would hope to achieve moaning about it on line, it just turns potential customers off. Full Stop.

Find a way to do this, or get out, simple.

 

I'm not moaning, just trying to say dealers are not a bad thing and selling everything over the internet and exporting is not the only answer, nor necessarily the way forward.

I agree dealers would not like the idea of dropping prices but if they had much more trade, they could. And eventually one of them will drop prices to grab trade from other dealers and they would all be at it.

 

I think Richard has a major chip on his shoulder. Maybe he feels let down by the dealer network, but anyway, I have recently been receiving threatening PM's from him. Although rather laughable and sad, they do rather show the kind of bitter individual who has been banned from almost all internet forums.

 

Sorry Tension I was not really referring to you.

 

richard

i have experience of working with/for uk manufacturers who have found the majority of their market overseas. in some cases it's because they lack credibility in the uk and end up selling their kit through local resellers , who them selves lack the credibilty to deal with more mainsteam suppliers.



tenson

wot is the point of a retailer having more trade and then dropping prices. it's running twice as hard to make the same money, and probably providing crap service as well.

 

Yup it's an age old balance - differentiate on grounds of quality or of cost. Calling the balance is down to the one doing the selling.

 

I fully agree with that, also Stereo Mic talks some truth in this.

 

To step into this debate would be to step into a minefield of economic theories with clown-sized shoes.

As Simon says, no pun intended, there is certainly a place for independent dealers who serve to bring choice to the consumer and inject competition into the industry. And if that competition promotes effeciency and innovation it creates a situation where everyone in the manufacturer/distributor/dealer/consumer chain can benefit.

As Garyi pointed out, there is some naivity in Simon's arguments but it need not be a "dealer or no dealer" debate. As I understand from Richard's post the debate ought to be about promoting and rewarding innovation. I for one, as a consumer, am happier to see a greater proportion of the purchase price end up in the pockets of those who flex their intellectual muscle rather than dealers who comparatively take on very little risk for the rewards they demand.

What I would really like is for all small HiFi manufacturers gather together in a warehouse somewhere one day a month like a farmers' market.

That's just me...

 

That letter is history it is about what was going on then and has continued to a degree into the present. From 1982 and the formation of nva up to the very early 90's virtually all my sales were uk, even some with Linn Naim dealers. But the early 90's recession changed everything, at that point in order to control market share large companies like Linn, Naim, Mission Cyrus etc created retailers contracts. These contracts were presented as a fait accompli, in other words sign up or lose your agency. These contract meant that dealer margins were set according to how much turnover the retailer did and whether that retailer promoted competitive product. Targets were set by the companies and the retailers were left in no doubt they were required to meet them.

Large swaithes of the cottage industry was finished off. Look at all the small manufacturers we have no more, I am sure you can list them, and those that went export survived for longer until the currency crisis of '97. I went on for another three years after that slimming down from 11 staff and about half million tunover to two staff and much smaller factory and turnover. I looked at that point to put the company on line and generate sales there, but the market and the technology wasn't ready. Now it is!!

Where do you think all the bargains in Brit product on ebay are coming from, look at the quality and choice we had in the '80's and early 90's, now much sought after as they still largely pee on what is around at the moment. I would love to see them all come back small time and take advantage of not having to put up with the avarice and fickle nature of UK retailers. Go on list them, at least 20 sorely missed manufacturing companies, and what have you got now!!

Even though I do not produce valve equipment I am very happy it is around as its popularity grew out of this lack of choice and it provides the colour (no pun) in the Hi-Fi industry and without it, well its all just boring Linn Naim in fighting, ho-hum!

Richard

 

Why assume they would drop prices by that amount? Is it not possible to drop them a bit to gain more trade but still make profit? It doesn't take a lot to gain customers over a competitor.

Anyway, I have given my immediate thoughts.

 

Tenson,

If you are selling direct via mail order you have to offer sale or return by law - you do not have a choice although some less reputable characters seem to think otherwise.

Dealers are in business. They want trouble free sales, and happy customers that bring repeat business. They get this by selling products from large and long standing companies that offer excellent service back up and market presence.

If you run a shoddy cottage industry type amplifer manufacturing business that offers no replacement warranty on poorly built and unreliable products, you cannot expect the support of reputable dealers who have worked hard to gain the market's confidence. In short successful retailers operate highly professional businesses and potential suppliers should expect to operate on the same level or be reduced to viral marketing on internet chat rooms.

To break into the real market requires a substantial investment in proper systems.

 

Weasel cowardice per usual, but I will presume those remarks are meant for me.

Here below is company policy. Name any other manufacturer who goes this far.

NVA Warranty

NVA products are warranted against manufacturing and parts defects for a period of the lifetime of the product, if held by the original purchaser. If sold a three years warrantee from date of original purchase can be passed on to the new owner, confirmed by sales invoice. There is also a 30 day money back guarantee if you do not like the product for some reason. It must be returned in as new condition, and will be examined to ensure that this is so.

The lifetime and three year guarantees assumes you have read and understood the warnings included with each purchase regarding proper selection and use of speaker cable required by the amplifier. Output transistors can be destroyed by improper use of unsuitable loudspeaker cable or by shorting the outputs, so we may not be too tolerant of claims that involve blown transistors. The parts used are of high quality and fail infrequently, but that does not mean it never happens. This is the real world.

Contact us at the address given below for assistance in returning the amplifier, and we will do our best for you. Remember to insure the amplifier when shipping, because we cannot be held responsible for damage sustained in transport. You are responsible for shipping costs incurred to get the amplifier back to us.

NVA Update policy.

When trading up to a new product further up in the nva range, i.e. moving from 10 series to 30 series, you will get your full purchase price, again verified by invoice, as trade in against your new purchase within a three year period of your original purchase. After that we will still trade in but on a sliding scale according to age.

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Since I have restarted production I have had three amplifier failures out of over 100 units, all three have been for the same reason, an incompatibility with another manufacturers product.

Richard

 

richard

a 'lifetime' warranty is worth as long as the longevity of the company giving it. you ,i think, have admitted that this venture is a back bedroom wim and one from which you don't depend on the income. i guess the amps could well last longer.

on your upgrade policy unless the margins on the '30' series are huge i think you're being a little over generous.

 

That actually made me laugh.

 

quite brilliant warranty strategy

 

This is ridiculous, how many times do I have to say it before any of you listen, or is more to your advantage to be deaf?

Once again if I do not sell another item of nva from this point forward nva exists!!! My living is made by my other business teaching Tai-Chi Chuan and Qigong go to www.art-of-energetics.com that is my website.

The reason it is back bedroom is so that there are minimal overheads and I ration my time commitment to it. The MAIN reason I did it was to provide a point of service for old product from the original company.

I am also in a position to tell it as it is and put up with the insults and libel from the vested interest that are posting here. The same things happened in 70's 80's and 90's but not so instantaneously as the internet. Campaigns of disinformation were entered into about some of the more vulnerable manufacturing companies some initiated by retailers some by the ruling larger manufacturers, normally based on BS and lies. Usual subjects 1 reliability 2 will they go bust or more often "they are going bust" 3 poor back-up and guarantee etc. Times haven't changed and we see the same things knocked up here, well hard luck I am not vulnerable, which is why I have chosen to do this and make this stand against the status quo.

I would ask you all to think about this, who is posting. You know who I am, who are they, industry members or retailers???

Richard

 

richard

i think you've confirmed the worth of your warranty.

no vested interests here - like most of us i tend to gorp at car crashes

 

Generosity apart from verbally to idiots is part of my nature. It is fully costed and is possible because of the low overhead nature of the company which is why I never intend to have stock or staff, apart from one person to carry it on after I am gone, hopefully many years in the future. Also we now have the *pass on* nature of ebay to recycle trade ins, when they will have *exactly* the same guarantee as the new product remember "price paid".

Anyway please could we get back to the subject of the thread. I know I seem to hold a fatal fascination for some of you. If so start a seperate thread and try your hardest to take me apart with all the innuendo and lies you can muster and I promise I will stay out of it.

Richard