Appliance sales may be the answer for growth for brick and mortar retailers Best Buy(BBY) and JC Penney(JCP). Best Buy has shown consistent growth in appliance sales while struggling with its core electronics business. JC Penney announced plans to expand a pilot selling appliances to many additional stores. At the same time, moribund Sears Holdings(SHLD), once the clear leader in the appliance business, has continued its downward spiral, ceding marketshare steadily.
What is it about the appliance business that stops an online competitor like Amazon(AMZN) from entering and dominating?
At first glance, one might think that people need a showroom; to experience the actual product. But one might have thought that about shoes, or any one of a panoply of products that are quickly shifting online. Does anyone actually enjoy going out to a store to select a new washer and dryer as the laundry piles up at home? Is the difficulty in managing delivery and installation? Many of the large players do not own their delivery networks, which makes for a customer experience they cannot effectively control. Could an online player do any worse? Unlike autos, there are no archaic laws or franchise systems preventing direct sales to consumers. So what are we missing? Has the time come for a seamless, online appliance buying process?
Disclosure: The author holds a position in JCP and AMZN
they do. Look at the success of Ao.comin the UK.
I buy quite a few appliances online and I see no reason this business won’t move mostly online over time. Even when buying through Home Depot and Lowes, the online option is faster and easier than sitting at a desk in store. My last purchase was a Fisher and Paykel refrigerator from Plessers appliance in NYC (I don’t recommend them!) on a black friday deal. Free shipping and no sales tax. I buy tankless water heaters on Prime from Amazon all the time. Again, free shipping and no sales tax in my state (plus 5% off with Amazon prime store card through Synchrony). Makes it hard for local shops to compete. My wife is a developer so we buy appliances fairly regularly. The math will change slightly when sales tax starts being charged in my state – as I’m sure it will be some day.