EXCLUSIVE: Several Hi-fi dealers, including Len Wallis in Sydney, have dumped Bose from their stores after the US sound company tried to force an “expensive” new merchandising system on dealers.
Bose’s move to start selling products direct to Australian consumers via their website is also upsetting retailers, as Bose will pocket the margin that is normally passed on to them.
With the advent of home theatre and iPod-attach technology, Bose has struggled to keep pace with new technology from vendors like Sonos, Denon, Marantz and Yamaha, as well as a host of iPod-attach manufacturers. They have also failed to deliver Blu-ray and at one stage were pushing consumers to use a stand-alone iPod dock system as opposed to integrating the dock into their distributed home theatre system.
Earlier this year, Bose told dealers that they had to spend thousands of dollars installing a new Bose merchandising system for their products. Several said “no way”, including Len Wallis Audio, which has sold Bose products since they were first launched in Australia.
“We have sold Bose for many years but the new merchandising system coupled with their plan to sell products direct did not make sense, so we pulled the plug on selling Bose via our retail stores” said Len Wallis.
The new “Blue” merchandising system that Bose was trying to “force” on retailers was set to cost custom installers up to $20,000 to install.
A NSW South Coast dealer, who has also pulled the plug on Bose, said that demand for Bose gear was waning and that the decision by Bose to sell their products direct was a “contributing” factor.
Bose documents seen by ChannelNews, which include a non disclosure agreement (NDA), reveal that the US audio company believes that the introduction of the new “Blue” merchandising system will increase sales of their products in Australia.
Bose advised their dealer network earlier this year that they “will no longer” have access to the Bose Wave radio range. Instead the company is set to sell the radios in Australia via the Bose online store.
“This represents 12% of my Bose revenue and what is interesting is that Bose Australia is pocketing the margin that they have traditionally given to retailers” said Len Wallis.
Another Bose dealer said “We already have a dedicated Bose area. The new look merchandising is larger and bigger than my current merchandising stands and I will have to expand their presence in my store if we accept the deal”.
According to one leading NSW Bose dealer who was not prepared to break the NDA, the move by Bose is “an exercise to cull their dealer network”. “Bose want to cut back their network because over time they believe that they can sell most of their products online. By demanding that retailers pay for their merchandising upfront, they know that several will refuse and when they do they will be denied access to all Bose products”.
Sergio Latino, a director at Klapp Electronics in Melbourne said that Bose dealers “really had no choice but to accept what Bose is proposing”. The owner of two Bose stores he said “This is a directive from the USA. It’s just the way it is. I don’t like losing business to online. The Australian Bose operation has had this forced on them and the position we are in, we can’t really say no. No one is happy and no one likes it” he said.
Another Melbourne based retailer, who is also a CEDIA member, said, “We cannot talk on record because of commercial agreements that we have signed, however, this is vintage Bose. They want to strip popular products away from us, then, force us to stump up thousands for a new Bose merchandising system. I have spoken to several Bose retailers and they are not happy. Bose is not the brand it once was. Consumers are buying other AV brands at mass retailers, who are also getting free merchandising stands from brands like Sony Samsung, Panasonic and several Hi-fi brands who are selling home theatre kits via the mass retailers”.
Jade Simpson, Marketing Director at Bose Australia, refused to comment on any issues. “We are a private cvompany and we will not discuss commercial issues” she said.