The closure of the 30 Expert stores in Denmark came as a total surprise to merchants.
At the same time a gap in the market opened so that Euronics can be introduced, according to El-Salg CEO Thomas Holm Hedehus.
But the experience of countries such as Sweden shows that the small traders will be trapped in reliance on that good service compensates for a higher price.
A consumer electronics war is coming in Denmark.
Expert consolidates and invests heavily in the Nordic countries, both in Finland and Denmark smaller stores had to fold to make room for the larger concept. Dissatisfied or rejected merchants have responded by opening new chains, 50 Expert stores became Veikko-Kone in Finland – and in Denmark Euronics is introduced as store brand where many former Expert traders will be included.
In Denmark is now awaiting a hornet’s nest where Expert will go up against Elgiganten. The question is how Euronics will be able to compete in an industry where prices have been primary in the means of competition.
In an interview in Børsen Thomas Holm Hedehus says Euronics will aim for greater or middle sized cities, but will not be found in retail parks where you find the biggest competitors.
“We will be located locally around the country where we are the local store with special skills,” says Thomas Holm Hedehus.
The newspaper also quotes the merchant Viggo Mulvad, who opened the first Euronics store in Ikast, that Euronics should not fight with the two big players. The key is to provide service at a competitive price.
The reasoning of proximity and service is recognized from countries such as Sweden where local Euronics merchants had a very tough time since Media Markt entered the market and the consumer price level was sometimes set below the purchase price for many smaller retailers.
“It will be a hard game when Elgiganten will defend itsterritory against a nydanat Expert and therefore you have to keep an eye on costs and have a cross-channel strategy in place,” says Thomas Holm Hedehus to Børsen.
Experience from Sweden says that order systems and the ability to quickly offer the product the customer is looking for without waiting time is a critical factor. In addition, many dealers experience that customers do research with them and then buy the product at a lower price anywhere else. Many dealers have therefore price guarantees or preferential installation offers.
Among other things, successful Audio Video merchants have told how they make up for lost margin of the main product by selling accessories like cables during installation.