Even though, here in Cayman we still have the specialist retailers, the booksellers, audio, jewellery and art shops come to mind, they seem to be dying out in the UK and US where I have visited over the last year. I don’t think it is the economy either. The Internet is probably the major reason. Our specialist shops are protected to a certain extent because of the high shipping costs and delay in receiving your goods together with the customs clearance and duty ‘add ons’. Jewellery stores cater mainly to the tourist. But are these stores safe forever? Or, as Paul McGowan of PS Audio is discovering, they can adapt to the Internet and survive?

At one time the public went to the specialist stores for the service. In two of Paul’s latest blogs to me he touches on this subject as follows:

“Getting what you bargained for”

Dealers have always discounted.  Even back in the days of famous dealers like Jonas Miller and Mike Kay, a discount could be wangled at the time of purchase under the right circumstances.  Sometimes that discount was disguised by a high trade in valuation or free setup or who knows what, but rarely did people pay full price for high-end gear. Dealers thrived, customers benefitted from their advice, service and close proximity.  If you had a problem or it didn’t sound the way it did in the showroom, you could rely on the dealer to help.

The equation of value was simple: customers paid close to the asking price for the equipment, the dealer provided years of service and help.  That was an equitable bargain. Then came the inevitable second tier dealer who eschewed service and advice to sell at a lower price.  Customers flocked to this model because, well, who wants to pay more?

Now we have lower prices through these dealers but what we have given up is the trusted neighborhood dealer who was a part of our community.

The problem (or the beauty) with any model in a free market society is you get what you bargained for.

Then in a later blog Paul goes back to the subject:

In my post “Getting what you bargained for” I talked about the rise of the second tier dealers who offer low prices instead of what the neighborhood retailer provided and how that’s changed the face of high end retailing forever.

That trend isn’t limited only to high-end audio, but to the art world as well.

On a recent trip to Santa Fe New Mexico Terri [Paul’s wife] insisted on dragging me through the local art galleries of Canyon Road of which there are many. I like art but hopping from gallery to gallery smells a lot like shopping, something that has never appealed to me. As I travelled between stores I started to see similarities between these galleries and high-end audio stores. Both have hand selected high-end objects on display and someone ready to tell you everything you wanted to know about each piece. Prices ranged from hundreds of dollars to many thousands. Definitely a similarity there.

Retail real estate in Santa Fe isn’t cheap so I couldn’t help but wonder how these galleries supported themselves with so little traffic walking through the door. The few customers seemed like proverbial tire kickers like us, treating the galleries more like free museums than stores.

I turned to Terri and said “You could probably get 80% of this shopping experience with a good website”.

She replied “I would never buy art over the Internet. You have to look and discuss and compare in person. You need salespeople who are knowledgable and can guide you through the process. That’s an absurd idea.”

The next shop we walked into had the proprietor sitting at his desk in a corner surfing the web. He waved and asked if we needed any help. I just had to know.

“Do you guys sell anything on the Internet?”

“Absolutely. In fact, 90% of our sales are now on the internet as are most everyone’s on this street.” Terri turned pale.

“Why does everyone have these expensive galleries then?” I asked.

“Credibility. People will only buy expensive art from a legitimate high-end gallery, not from some Internet retailer. They don’t trust the Internet retailers but they do trust us.”

My how things have changed.