Appliances and consumer electronics retailer The Good Guys has entered the digital age and dropped its promise "pay cash we'll slash the prices" in its television ads.
According to CEO Michael Ford, more than 57% of consumers research products online before they come into stores and offering discounts for cash was no longer a guarantee of a sale, particularly as consumers move more into a cashless society.
"Customers have so many other ways to pay and our online prices are the same as [prices] in store," he told Fairfax Media. "The power has shifted from the retailer to the consumer and the consumer has become digitally empowered."
The Good Guys has 99 stores around Australia and reportedly checks its prices 5 times a day to compete with traditional bricks-and-mortar rivals Harvey Norman Holdings Ltd (ASX: HVN), JB Hi-Fi Limited (ASX: JBH) and Dick Smith Holdings Ltd (ASX: DSH).
I imagine the company will also be comparing its prices against those on EBay as well as other online retailers such as Grays Ecommerce Group Ltd (ASX: GEG) – which owns Grays Online, oo.com.au, Deals Direct and TopBuy.com.au, all of which sell home appliances, TVs, computers and other products The Good Guys stocks.
In order to compete, The Good Guys now has to offer services that the online-only retailers can't, such as easy replacement and repairs, protection against subsequent price reductions – things that require a customer to deal with a person, rather than a website – and its working.
The Good Guys now has sales of more than $2 billion, the equivalent of what JB Hi-Fi does in six months, about one-third of Harvey Norman's total annual global sales and around 1.5 times that of Dick Smith's annual sales. Sales are growing in low single digits according to Mr Ford, and The Good Guys plans to open its 100th store later this year.
Foolish Takeaway
Retailers have to constantly innovate to compete, particularly as there are now many more competitors online. The Good Guys has shown that it can do that. Removing the 'cash price promise' is just another step in that process.
