Take my treadmill, give me a bicycle instead
Opportunity: Exercise equipment buyback programs
Recent news announced plans for major sports equipment retailers, such as Decathlon, to enter the Romanian market. This will introduce stiff competition for local retailers that have ‘owned’ the market up to now. Romanian retailers face dire prospects of being pushed out of the market by international competitors - see, for example, the well-known demise of Univers’all supermarkets, unable to face competition from international giants like Carrefour.
In a recent discussion with some of my students at ASE, they came up with a strategy that local sport equipment retailers could use to maintain a competitive edge: creating a very attractive equipment buy-back program. People usually enjoy a new Stepper or Stationary Bicycle for a couple of months, and then tire of it. It becomes useless clutter, serving as an clothes hanger or simply gathering dust. The sunk cost of having purchased the equipment acts as a deterrant to buying additional equipment that will undergo the same cycle. Average apartments in Romania have very limited space, and there is no storage space where people could store unused equipment. There are also very limited options available for people to get rid of unused equipment - garage sales are unheard-of here.
This means that additional revenue can be obtained from existing customers by retailers that offer buy-back programs, as people bring in old equipment and leave away with new stuff (similar to the Nordstrom model, explained in an earlier post here). It also encourages new customers to buy, as their fears regarding long-term use and disposal receive an answer.
If actively marketed, this type of strategy could offer the differentiating factor that will keep and increase a flow of customers to local retailers.
Written by Sara
February 22nd, 2007 at 5:59 pm
This will totally change the rules.
February 23rd, 2007 at 12:44 am
There is a great surf/sport shop in Manhattan Beach, California that sells new and used equipment. It is great since you would not want to buy a brand new surfboard only to destroy it while trying to learn. You can also buy other used equipment when you do an activity too much for renting but not enough to invest in brand new things. By allowing you to bring things back and getting some value returned, it takes away the risk of buying. The sells more things and sometimes the same thing twice (or more) for a nice profit. It must be going well since they moved from a not-so-nice to a very nice location.