Is Bose doing the smart thing in closing its stores?

Discussion
Photo: Getty Images/anouchka
Jan 20, 2020
Tom Ryan

Citing “the dramatic shift to online shopping in specific markets,” Bose announced plans to close its remaining 119 retail stores across North America, Europe, Japan and Australia over the next several months.

In a statement, Bose said it opened its first store in the U.S in 1993 with a goal of providing “personal, private demonstrations” for its Wave music systems and Lifestyle home theater systems. With smartphone technology, Bose introduced noise-cancelling headphones, wireless sport earbuds, portable speakers and smart speakers and the privately-held company noted that these items are increasingly purchased online.

“Originally, our retail stores gave people a way to experience, test and talk to us about multi-component, CD and DVD-based home entertainment systems,” said Colette Burke, VP of global sales at Bose. “At the time, it was a radical idea, but we focused on what our customers needed and where they needed it — and we’re doing the same thing now.”

Bose noted that its products are also carried at Best Buy, Target, Apple stores and other third-party retailers. Online, the product is sold on Amazon.com and on the company’s own website. 

The company has 54 stores in the U.S. Affected workers will receive outplacement assistance and severance.

Ms. Burke added that she regrets the decision’s impact on store teams. “They take care of every person who walks through our doors — whether that’s helping with a problem, giving expert advice, or just letting someone take a break and listen to great music. Over the years, they’ve set the standard for customer service,” she said.

Approximately 130 stores located in Greater China and the United Arab Emirates and additional stores in India, Southeast Asia and South Korea will remain open.

While Sony and Samsung have flagship stores, Bose has always stood out for its extensive store base. Among closer competitors, Harman Kardon and JBL, both owned by Samsung, share a flagship in Madison Avenue in New York City. Last year, Sonos opened its first flagship in Manhattan’s SOHO neighborhood with private listening rooms to demonstrate how smart speakers work in homes. 

DISCUSSION QUESTIONS: Does Bose’s move to close its locations in more mature markets make sense? Have physical stores become less relevant for the audio category as it has become more closely tied to smartphones and portability?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"While probably a short-term necessity, I believe this is a long-term loss for Bose."
"I am surprised that they did not keep open a few very high profile locations in places like New York City."
"The way to obscurity is invisibility. Without their name out there in prominent — and high-end — malls, I think this will be seen as a mistake."

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22 Comments on "Is Bose doing the smart thing in closing its stores?"


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Mark Ryski
BrainTrust

This seems like a sensible move for Bose. As noted, the move to open Bose stores was innovative when they first launched, however, with the broad availability of Bose products at so many other stores, it’s not entirely surprising that they found their own stores less important to customers and likely financially a burden. Simply put, it just doesn’t make sense to have all these stores any longer. But while I think the move to close most stores is right, I’m surprised that they didn’t decide to maintain a few high profile locations to continue to present their brand and showcase new products.

Paula Rosenblum
BrainTrust

I think it’s a good idea. Most electronics stores will demo Bose stuff for you, and with Bose’s marketing prowess (extreme), the company should maintain sales.

What they are giving away is margin, by selling exclusively through third parties, but I’m sure they’ve done that calculus.

Tom Erskine
BrainTrust
8 months 2 days ago

While probably a short-term necessity, I believe this is a long-term loss for Bose. Bose has always been about audio quality, and immersive, owned store experiences are the best way to expose consumers to the difference between Bose and other, less expensive, audio choices. Even if they invest instead in “store-within-a-store” approaches within consumer electronics retailers, I highly doubt that those channels will have the motivation, training, etc. to help educate consumers on the difference.

Art Suriano
Guest
It makes sense for Bose to close their stores because they have not been successful. But the reason is they never had a robust business model for their stores. Bose speakers are the best, and I’ve had them as well as their headphones for years. However, their stores were never exciting because they lacked pizazz. Frankly, they’re boring. There is only so much you can do with speakers. They would have been better, and still would with either a “store-within-a-store” concept in other retail chains or their own mall kiosks. Once you put on a pair of their headphones or sample one of their amazing audio units, there’s very little else one needs before making a decision. Having a store with so few products always looked a little strange. They should have partnered with other component companies and they would have done better. So closing the stores makes sense because it is too late for them to come up with a better business model that would make their stores stand out and create excitement. They… Read more »
Adrian Weidmann
BrainTrust

At this point in their evolution, Bose stores seem to be more about corporate ego and brand promotion – neither of which Bose really needs at this point. Closing these locations seems like a prudent business decision that won’t materially affect their brand and business. The energy and resources should be focused on “store-within-a-store” formats.

Suresh Chaganti
BrainTrust
Suresh Chaganti
Co-Founder and Executive Partner, VectorScient
8 months 2 days ago

Retail is never going to be a significant sales channel for Bose, but a very critical awareness channel. All customer journeys start with awareness, so Bose is going to miss that important foundational step.

Bose not finding value in the retail channel means bigger problems. They will not have a close ear to the ground to introduce new products or pilot new innovations in test markets.

The mistake that brands are making in treating retail stores primarily as sales channels is going to come back and bite them. It is even more critical for Bose as it is positioned as a lifestyle brand.

For Bose’s sake, I hope they will strengthen partnerships with likes of Best Buy, Costco, etc., to showcase their products and have a good retail strategy.

Harley Feldman
BrainTrust

The Bose move makes sense as they have partners where shoppers can experience their headsets (and their competitors), they are sold online, and headsets are not a new experience anymore. I am surprised that they did not keep open a few very high profile locations in places like New York City. Physical stores are less relevant as a pure headphone outlet as phone stores and electronic stores are stocking headphones as part of their audio offerings.

Paula Rosenblum
BrainTrust

They also make speakers. Good ones. I think we just found a reason why they need stores,

Steve Montgomery
BrainTrust

While I admit I have not been in a Bose store in some time, I knew when I went there I was going to speak with someone who truly knew their product, not someone who knew a little about them which is what you often find in a store that carries their and other similar products. Financially it may be a good thing but like Mark I am surprised that they didn’t keep some key locations.

David Naumann
BrainTrust
David Naumann
Retail Industry Analyst
8 months 2 days ago

Profitability is an imperative for long-term survival. While it is important to have a visible store presence for most retail categories, maybe Bose can rely on a store-within-a-store model. If the demand can’t support a physical store, Bose has to stop the bleeding.

That said, I hope they analyzed market area revenues (combining online and physical store revenues) to understand the impact the physical stores had on online stores. There have been many retailers that experience a dramatic drop in online sales when they close physical stores!

Casey Golden
BrainTrust
8 months 2 days ago

The physical direct business model for Bose does not make sense for a go-forward strategy. Personally, I didn’t even know they had physical stores and if I was shopping I would go to a multi-brand retailer. The LTV, store overhead, and customer targeting costs outweighs the potential gains. Focusing dollars on product relevancy and collaborations is better spent money. Current designs are flat even though the quality still provides relevant brand equity. There are ways to increase sales in retailers where a company can focus on the selling and brand experience to win marketshare. Harman Kardon has done a better job maintaining brand and product relevancy.

Peter Charness
BrainTrust

Eventually there will be statistics as to what the negative impact of store closings are to the online business. I think some “brand” stores kept open would have been wise, particularly for high priced items, where the customer journey at some point would include trying them out.

Joel Rubinson
BrainTrust

One of the most impactful demos I ever saw was in a Bose store. what is that memory worth? The stores do a lot more than sell products…they are experience stores that demonstrate the superiority of Bose and the better lifestyle one can live as a result of buying their products. I would view it as a marketing budget item, not a line of business. As such, I think they could have come to a different decision.

Kathleen Fischer
BrainTrust

The audio category is one of the areas that has changed tremendously from the advent of online shopping. While overall retailers tend to benefit from having a presence across channels, Bose may need to focus on their core business to survive.

Richard Hernandez
BrainTrust

Financially, I understand why they did it, but going into a Bose store, talking to an expert, and listening to the actual product, really helped me as a consumer to make the right purchase for me. There is value in having these stores. I do not think I would have gotten the same expertise at Target or Best Buy….

Craig Sundstrom
Guest

This is a little different than most of the store closing stories we see in that this isn’t a retailer, it’s a manufacturer (indeed the pic shows a “factory outlet” although I’m not sure all their stores appear as such). So the question is, were these stores like (those of) Apple or Nike — i.e. highly successful brand flagships — or more like others that we never really noticed? I’m guessing the latter. If they come to regret the decision, they can always reopen them … perhaps on a more limited basis.

Patricia Vekich Waldron
Staff

I would rather have seen Bose select a few key locations and transform them into true Flagship stores with an amazing experience for customers.

Bob Phibbs
BrainTrust

Count me on the side that thinks this is dumb. I purchased my first headphones from Bose at the Newport Beach store using a guided demo from an employee contrasting what I hear with the earphones and what was actually going on in the store with the sound of an aircraft.

The way to obscurity is invisibility. Without their name out there in prominent — and high-end — malls, I think this will be seen as a mistake.

gordon arnold
Guest

It’s the money. It’s always about the money. Opening brick and mortar stores that generate online business is a 21st century retail bear trap that retailers seemingly refuse to look out for. If you want the store business to succeed, try offering the latest and/or the greatest in store only for awhile. Prestige buyers will go where and pay what they have to to get what they want. Use it.

Ricardo Belmar
BrainTrust
I have to dissent with the majority here and agree with Bob Phibbs that this will ultimately be a mistake. Perhaps in the short term, they will not see a significant dent in sales, but I expect in the long run we will see them return to brick and mortar with some interesting flagship stores. to tell the rich history of the brand in sound innovation. As a longtime Bose customer for whom my first set of stereo speakers were Bose (Model 301 Series II for those that remember the days before noise-canceling headphones and home theater systems!), I remember their first store openings. In fact, I’d argue they were one of the first experiential retail stores before any of us even knew that term existed. Much like Apple stores to come after them, Bose stores were set up to showcase what made the sound from a pair of Bose speakers so special. It’s interesting that many comments here seem to assume all Bose sells are noise-canceling headphones and portable Bluetooth speakers! No one here… Read more »
Ananda Chakravarty
BrainTrust

With the technological edges from the 90’s-00’s erased, the stores are not as critical to Bose being able to sell their most advanced technologies. The cost of operating these stores would be a cost that no longer brings in conversion in the speakers and headphone markets. Bose can continue to put their dollars to marketing tasks such as on the NFL coaches’ headsets or in prime Best Buy locations — plus offer their products through online direct-to-consumer channels. Good move on Bose’s part to reduce investments that were most likely break even, freeing up needed cash.

April Sabral
Guest

It makes sense considering they have other avenues for the customer to experience the product. However, it is always sad to see brick and mortar stores disappear. It would be nice to see what they can do in the future with pop-ups these are other ways to have the direct consumer experience the amazing sound quality. I am sure this is not the end for them.

wpDiscuz
Braintrust
"While probably a short-term necessity, I believe this is a long-term loss for Bose."
"I am surprised that they did not keep open a few very high profile locations in places like New York City."
"The way to obscurity is invisibility. Without their name out there in prominent — and high-end — malls, I think this will be seen as a mistake."

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