Not in My House: People Go to the Little Guy for Repairs
Where do you go when your computer breaks down? Not to the big-name stores.
May 29, 2007 — -- The comely castaways of ABC's "Lost" aren't the only ones who are lost when it comes to television. When the television breaks -- or the computer, or any other hi-tech item in the house -- where do Americans turn?
My firm, The NPD Group, has done research that examines how consumers buy warranties, installation services and technical support. We found that many Americans opt to bypass such services offered by major technology retailers and instead turn to independent installers and manufacturers. In many instances, the Goliaths are struggling to compete with the Davids.
Major consumer technology retailers have turned to services as a source of revenue growth and diversification. These include Best Buy with its short-sleeved "Geek Squad," Circuit City and its "Firedog" services group, and CompUSA with its "Techknowledgist" initiatives. Staples, the world's largest office products chain, has tied its service branding into its "That was easy" slogan with "EasyTech," which its Web site promotes as offering "salvation from PC frustration."
However, despite heavy in-store promotion and in some cases trademark fleets of vehicles, 23 percent of those surveyed who required technical support in the past year got it from local providers --the proverbial mom-and-pop operation. Only 12 percent had turned to major electronics retailers for such services. Manufacturers were the other leading providers.
What makes retailers think they can crack the tech-support market is the fact that they've actually been in it for years. They've been offering extended warranties for almost anything that has a replaceable part.
These warranties have proven extremely profitable for retailers, which, like insurance companies, play the odds. They count on products not to break, or at least not break in a way covered by the extended warranties.
Despite frequent advice from consumer advocates to pass on extended warranties, big-box retailers sell more of them than any other source, according to NPD's survey. This is true even for PCs. The stores captured about 40 percent of extended PC warranties sold, but major retailers sold significantly fewer PCs than the manufacturers.
