What do audio shops need to do to survive ?

Take 2:

The Internet wave is going still, making it easier for us to buy practicaly anything, including high-end (and bad-end ) audio also.

There are difinite advantages to being able to walk in a shop, glance around, get helpfull friendly advice, and, without pressure, sit down for an audition. Problem is, this doens't happen very often...so...is there still a worthwhile value to brick and mortar shops?
I think that "brick and mortar" audio shops could still survive. But there has to be a new way of thinking. The idea that they can make $5k profit on a set of speakers is gone forever. Maybe the specialist that only sells $50k speakers that cannot be gotten anywhere else may still be able to whack the wealthy customer for 50% of the selling price in dealer profit, but not with the middle class customers. Price conscious people in an economic crunch will seek out the lowest cost possible for their purchases.

What the dealers must do, is to realize that things are never going to go back to the "glory days" of old, when they could make huge profits on a single set of speakers, because they were the only dealer in town, with a protected territory, and you had to pay the price. Now the "audio sodomy" is going the other way, and they don't like it much. Hard for them to make the Porsche payment now.

For peaceful coexistence, there must be a meeting of the minds between the dealer and the customer. The customer is not going to pay huge 40% markups to a guy who goes into the back room and hands him a box. The customer thinks this is piracy. The dealer is not going to give any time of day to the customer who is going to offer him 10% over cost for the item, or go out and buy from the internet. Both sides think the other side is trying to screw them. This is not conducive to good business.

I think that there will be 2 kinds of dealers that will survive. The first is a dealer that cuts prices to the bare bone, still gives some helpful service, warrantees the product, and gives local peace of mind to the customer. This is hard and not highly profitable, and will result in a basically "blue collar" dealer who just eeks out a living. This kind of dealer will probably make most of his money in HT installation work. The other kind is the very high end, ultra specialist dealer that only has customers with six-figure budgets. He will do consulting, custom work, interfacing with architects, and the final customer training. He will make alot of money on everything, and will likely have several Porsches and a Mercedes.

It is because the economy is polarized and is not going to change. It is because the wealthy have alot of money, but time may be limited. They will pay to have the chores taken off their hands by an expert. The rest of us are in a cash crunch. The more savvy of us will buy off the internet, because we know what we're doing, and dealers offer little value to us. The less-savvy will need a little "hand holding" by a dealer to help them feel comfortable.

The idea that a middle class guy will walk into an audio store and spend $20k on a pair of speakers that cost the dealer $10k is gone forever. Only the rich will do that now. And they didn't get rich by being stupid either. If they can save money, they will.

Everybody else will buy from the cheapest reliable source possible.
Now,if you order something on line from Van Alstine or Odyessey(to name two reliable suppliers),it takes a while for it to be built and delivered. At some point,manufacturing technologies will advance to the point that the interval between order and UPS delivery will be less than a week. When "just in time" delivery of finished goods is possible,retailing possibilites will exist that do not exist now.
I would not attempt to take business from Circuit City or Best Buy;they have too much marketing muscle. What I'd consider would be renting kiosk space at malls during the winter quarter,stocking one of every item I offer,and taking orders for pre Christmas delivery.
what is wrong with 10%
Skyebox, nothing is wrong with 10% over cost, except that many brick and mortar stores cannot keep the doors open on 10% profit over cost. They have all kinds of expenses beyond what they put in their pocket. I doubt that many could exist on that level.
Normally, brick and mortar specialty stores survive by providing services that can't be matched on the Internet or by mail order suppliers. Their overhead is higher, so their prices need to be a bit higher for them to stay in business.

What they normally offer the customer is a venue where they can see and listen to different models within their budget; and a place to return faulty or defective equipment and get it repaired or replaced without the hassles of shipping.

But in today's market I think they need a new gimmick or enticement to help them stay afloat. For example, maybe they could institute a "trade-up" policy, where they will give you something like 80 percent of your purchase price up to 2 years from the date of the purchase toward the purchase of a similar component, provided that component is at least 1.5x the price of the original component.

That is just an off-the-cuff example of a new service that could be enticing to prospective buyers and I'm sure there could be other things that could be done to attract business, such as holding manufacturer seminars and volunteering to host local audio club meetings.

The bottom line is that brick and mortar establishments can't just sit in their shops and wait for business to come to them. They have to adopt a proactive attitude and use their creativity to go out and grab the attention of prospective buyers.

Also, it is beyond my comprehension how certain retailers can afford to be snobbish toward any customer in this type of economic climate. I would think they would need to be as cordial and helpful as humanly possible...
Another thing I thought of is that brick and mortar shops can take advantage of the Internet as well. They should try to set up and maintain a good interactive web presence and maybe employ a clerk who's sole responsibility is to maintain the website, process orders, and field inquiries from the Internet. They could also list and events calendar and special Internet coupons that could be printed out by users and redeemed at the store for additional savings on selected merchandise...

I think retailers who don't take advantage of the Internet's potential are doing themselves a big disservice.
I personally think it starts with the Manufacturer. The greed line starts there and pretty much puts the squeeze on the Shops to survive. When a manufacturer demands 400% profit on a piece its all up hill from there.The hobby of of being an Audiophile is getting smaller and smaller. In order for the Audio Shops to survive,we all have to refuse to pay rediculous prices to the Manufacturer.This greed forces us to the used and online market. Sure its nice to sell a new pair of $35,000 speakers but why is it going up for sale a year later for $12000 ? Someones cashing in and its not the little guy!!!!!
What Twl is saying is accurate. However, there is another way; the dealer must find products that represent a level of performance mass produced products can not compete with. The international market is hungry for performance. The problem: very few audio companies offer that level of advanced technology/performance. To achieve this, when resources are limited, a financial trade off must be made between monies spent on advertising or research. This means the product may be great but very few are going to know about it. The dealer must develop marketing skills to advance product recognition.
Corona, you hit upon a good point -- I know of quite a few small audiophile companies that do not and will not budget adequate funds to market their products. As you say, the products may be great, but if no one knows about them they won't buy them. Small manufacturers tend to think that minimal advertising and word of mouth will get them by but unfortunately it doesn't usually happen. On the other side of the coin, advertising is VERY EXPENSIVE, so it's almost a catch-22. And it is those companies who've bitten the bullet and swung for the major advertising -- the big-name companies -- who are raising high-end prices through the roof and you almost can't blame them. Then again, I don't know many folks who pay actual retail for anything. It makes me wonder how any new gear gets sold in the first place.
When I first got into this hobby, store owners would really take care of the customer. THey would work on building a lasting relationship. Then we got into the 90's and they couldn't get product quick enough. I used to stop by my favorite audio stores once or twice a week with coffee and donuts, pizza, or chinese food and just shot the sh--. Then the 90's boom came along and I started getting blown off and they did not want me in the store unless I was buying something. Now that things are getting lean they don't remember how to treat a customer correctly. On top of that they expect you to pay full retail, tax, and freight. Yeah, right, do you have any bridges for sale while I'm here. The last item I bought, a surround sound processor, I had to beat the dealer over the head with a brick to get him to sale it to me. And forget about the local tweeter. The last time I was in there I was the only customer and there were four salespersons. So, How long did I have to wait at the front desk until someone came over to help me? You guess correctly: 20 minutes. Then, they didn't have the product I wished to purchase in stock and said it would take 4-6 weeks to get one. I walked out and ordered it off the net; had it in two days.

Now, here's a product that really gouges the customer. It's a picture frame that goes around a 42" plasma monitor that hides the monitor. It consists of a piece of cheesy artwork that is raised and lowered by an IR controlled motor. It uses the same motor as in my Hunter-Dougles motorized blackout shades that I paid under $400.00 for. A stock russound IR control block is used. The frame consists of some powder coated angle iron and a faux mohogany stained pine frame. I think the total cost of parts has to be between $300-$500 including the "artwork". So, how much do you think these thing cost? $1500.00? $2000.00? How about $7900.00!!!!! That's right, you did not read it wrong. $7900.00!!!! That's more than most 42" plasmas cost! Dealer cost is a little more than $3000.00. I asked the dealer what he was charging for install and he said $500.00. It took him and me about 20 minutes to install the demo unit in his showroom. Now, granted, this is a niche product, but I really think they are taking advantage of the customer. This is where someone chimes in with "It's worth what the market will pay....". Well, he's been a dealer of this product for about 8 months now. Can you guess how many he's sold? 2? 5? 17? That's right, 0!!!!! I told him that he was never going to be able to sell it at that price and he told me I didn't know anything about sales or his customers. Hello, am I not one of your customers? Now here's a prediction: he'll be listing it right here in a few months for a lot less then $7900.00! This is the same dealer that tried to convince me that a Denon 2803 receiver is better than an Anthem AVM20.
B&W has a good idea with the $300 600's and NAD at the front of the store. A complete setup for under $1,000. Which is still a lot for most people.
But the idea is a good one. Start with a good bang for the buck stereo. Get people into hi-end stereo for as cheap as possible. Maybe people will want to upgrade in the future building more business and hopefully a lasting relationship with the dealer.
TWL did you see this single driver site?
single driver speakers
Prpixel's story is specific to him but nevertheless it's very generic to the high end audio scene. This is what has happened to too many brick and mortar shops. The greed and arrogance is there in spades without an appropriate economy to support it and it's down right insulting to be thought of as that ignorant. His post epitomizes what is wrong with high end audio. There are simply too many retailers that feel entitled. Apologies to the good ones.
My suggestion...separate the shop from the club house. Invite people to come in and listen and debate to their hearts content in a separate listening room which requires a small membership fee for access. I have pity for the poor salesman who is tied up for hours on end by "customers" who, 90 percent of the time, are just looking.