The Deputy Managing Director of Sharp claims that mass retailers who are playing a game of “one upmanship” in a “discount race to the bottom” are set to destroy the consumer electronics and IT industry.The Deputy Managing Director of Sharp claims that mass retailers who are playing a game of “one upmanship” in a “discount race to the bottom” are set to destroy the consumer electronics and IT industry.
Dennis Kerr who earlier today announced that he is set to retire after 14 years at the Sharp Corporation claims that retailers have to rethink their current strategies or face insurmountable problems.
Kerr, 64, who joined Sharp in 1997 after 14 years with Toshiba, said that he is still open to taking on other opportunities.
Kerr said “The one upmanship between retailers is destroying the industry. All they want to do is out discount each other this is the biggest issue the industry is facing. It is a race to the bottom for both retailers and vendors”.
He said that the industry was facing “inventory” problems and that some vendors are dumping stock into the channel just to keep their “numbers up.
He said “There is some great technology out there, new technology that is way ahead of its field but despite this significant value benefit retailers are discounting the product within hours of getting it into their stores. This is destroying the value of the technology and doing nothing for the retailer”.
When asked whether retailers were failing to educate their staff to sell up Vs constantly discounting Kerr said “I have no doubt that all they know is how to race to the bottom”.
“Having said that, this it is what the consumer expects so it is always going to be difficult for them as the Internet is driving price perception. The expectation is that you can get it a lot cheaper online than what the same product is selling for in a shop”.
Kerr said that the growth in new retailer groups like JB Hi Fi, The Good Guys and OfficeWorks had led to an explosion in retail locations where a consumer can shop. “This has contributed to competition between retailers” he said.
“Retailers are looking for growth whether it is via discounting or new store openings. The consumer has more choice as a result they are shopping around more than ever before”.
When asked whether he agreed with Gerry Harvey’s recent claims that a “mass retailer will go broke soon” Kerr said “Yes, Gerry was pretty spot on”.
He said “Retailers are going to have to look closely at their business models the amount of stores they have and their locations. Inventory levels are already an issue. High inventory levels means that the stock has to be supported by credit from somewhere and the more the stock is on the floor the more demands there are on a retailer’s cash flow”.
“The inventory issue is not just affecting retailers it’s also impacting on vendors and every supplier is under pressure at the moment”.