retail sales - local shops vs mega marts

in the 90's i worked for a local high-end hi-fi and tv shop. it still exists today. a lot of the business relied on selling things that were not available at local mega marts. anything we did sell that was also available at the mega marts, we always sold at or below cost simply because we didn't have the huge buying power the big guys did. so it was something to get people into the store and maybe get them interested in other things - like a new subwoofer to go with that surround sound receiver.

then there was "regional" competition on the high-end gear. companies often threatened to de-authorize us for selling stuff too much below suggested retail. for example, we were a dealer for Thiel speakers and there we were the only dealer at the time in the state, but then we got another dealer in the state and they frowned on us considerably if we undercut the other dealer.

today, 10 years later, i see shops like B&H on the internet sell camera gear and tv's and receivers and speakers for way less than mega-marts and local shops. for example they sell Pioneer Plasma sets for pretty much $400 cheaper than what i can get at best buy. so wouldn't pioneer threaten to pull the line from B&H because they are undercutting?

i know very little of business, especially of electronics and the owner/manager of the store i worked at probably didn't tell me a lot because i'm sure he wanted his sales people to NOT have a "discount" attitude. maybe the threat of pulling the line was a lot of smoke?

the reason i bring this up is that it seems like a great challenge to buy an electronics store and be successful at it.

thoughts or comments?

SgWRX wrote in post #2397720
....companies often threatened to de-authorize us for selling stuff too much below suggested retail. for example, we were a dealer for Thiel speakers and there we were the only dealer at the time in the state, but then we got another dealer in the state and they frowned on us considerably if we undercut the other dealer......

This sounds like price fixing which should be illegal. I know MS does this and I can’t figure out how they get away with it, but it would seem that a manufacturer and a retailer are in different businesses. Manufactures make the goods and sell them to wholesalers who intern sells to the next middleman and so on until it gets to the retailer. Once it leaves the manufacturer they are done and have made their profit. A retailer sells the goods based on his cost. For a manufacturer to protect one retailer over another just screams collusion.

Of course B&H can sell stuff cheaper then places like Best buy. They’re not paying for the infrastructure that places like Best buy are . B&H has what one store in NY and a few where houses in NJ, While Best buy has hundreds of stores all of which have to be staffed, and then there's utility bills and property taxes.