Experience Stores: Last Hope for Traditional Electronics Markets?

Want China Times reports that Tu Wenxiang, CEO of Cybermart, who claim to be the first one stop shop electronics store in China (their flagship store opened in 1999), remarked that electronics stores with physical locations are declining 20% annually. (The New York Times puts the U.S.’s decline in electronics sales in physical markets at 2.6% per year in the last five years, coinciding with a 14.7% rise in online sales.)  Even if the statistics, however credible, are a bit alarming, the fact that online retail is trumping all other forms comes as no surprise. But electronics companies haven’t given up on physical locations just yet.

It seems the only reason for a tech company to open up a store these days is for the glitz and pomp, because as any internet-savvy consumer knows the traditional brick-and-mortar model for selling gadgets is going or has already gone belly up. What reason do consumers have to visit a store location unless it’s something of an experience in and of itself, something Apple stores have been lauded on for providing?

And Tu sees this trend spreading to competitors like Samsung and Lenovo. Instead of selling their overhead space altogether, Cybermart plans on converting the space into one that could be used for boutique, experience-centric stores. He says that companies like his, which intended to sell electronics, are now, “more like realty firms than retailers.”

In fact, they plan to expand from 34 stores to 50 by 2015, all renovated and ready to house the next generation type of electronics store.

All of this is not to say that walking down the smoke filled, seedy labyrinth of Huaqiangbei in Shenzhen, for instance, isn't an experience. But consumers in China seem to be beginning to feel that if they are going out of their way to see a product in person, the place where it’s housed ought to shine and sparkle as much as the product itself.

Can any model really work though, or will online retailing of electronics prevail no matter how companies package themselves in person? I think it’s a last ditch effort that will end up hurting the companies more than helping them. As our older generation fades and younger one rises, people will more and more expect to never have to queue for purchasing again.

If anything, brands should look to invest in their relationships with delivery companies instead of fancy physical locations.