I agree with Brian White's take on Best-Buy getting involved with the supply chain through D&M. D&M caters, he rightly assesses. to a niche and eclectic market that might not favorably respond to any connection these products have with Best-Buy. Another important consideration is the danger, if not already considered by BB, of D&M becoming a captive supplier when competing and existing retail customers might balk at the idea of buying products indirectly from BB for obvious reasons I need not get into here.

It could be a dream scenario if greed was taken out of the equation.

In a way, it sort of eliminating the middle man to a degree. That is having the same company produce and distribute the product. In theory, the consumers could see some savings.

I would love to see some McIntosh equipment available for lower prices. But we live in America. And the name of the game here is to squeeze every penny out of the humans as possible. So what very likely could represent a benefit to consumers... will probably do just the opposite.

I was president of one of the largest independent audio retailers in the 70's and 80"s (Stereo Discounters Electronic World) focused on brand name consumer electronics throughout the distribution chain-retail, wholesale and mail order, as well as manufacturing our own brands in the U.S. and importing our brands from overseas. The "high end" brands like Harmon, Denon and others were reluctant to sell to us because we were - horrors- a discounter, which didn't fit their image of the type of retailer they wanted to present their "high-end, prestige" products. Perhaps rightly so, although the leading brand at the time, Pioneer, became our largest seller by volume within a year of our agreement to sell their products, after the demise of Fair Trade laws.
I maintained then, as I do now, that greed is the determining factor in manufacturers decisions to widen the distribution of their products.
So, if Best Buy were to take on these major brands, what might be the consequences?
Well, for one, if BB used their standard pricing policies to market Harmon, for instance, all the other long-established, high-end Harmon dealers would immediately feel the heat, as would service, value-added dealers of Denon and other similar brands.
BB might get a year or two's worth of sales value from the acquisition, and maybe their overseas markets could enjoy enhanced prospects. But in the U.S., Best's primary and largest market, it wouldn't necessarily be a good thing.
The fact that this is being discussed raises other questions. Why are they for sale? Is it possible that the VC's made a bad deal; or a deal they were unqualified to manage?
Has the growth of BB made the idea of high end brands sold through value-added retailers an anachronism? In other words, are Harmon, Denon and similar "prestige" brands no longer worth what they were? Has digital technology so leveled the audio playing field that there isn't any "oomph" left in prestige brands? No way to differentiate?
That may not be true in the audio/hi-fidelity speaker system arena, where quality of materials, manufacturing technology, design and consumer preferences play an important part in selection.
And those prestige brands are only adjunct players in the high growth areas of home theater systems, soon to be "the" place to be.
The real questions include, "What are the enhanced profit opportunities in acquiring major brands? "
Could Best Buy modify it's pricing policies for these exclusive brands, and thereby enjoy greater profitability? Or would consumers, as the writer suggests, simply "write down" their mental value of the brands precisely because they are now carried by a mass merchant, rather than a specialty retailer, and give up the brand "cachet?"?
Would BB's own buying offset the certain decline in buying to occur from the long established value-added speciality retailers, particularly in the U.S.?
If the price were right, and the evaluation considered and thoughtful, the marketing strategy carefully drawn, the risk might be worthwhile, with limited downside, based on Best's ability to sell in volume through their dominating retail distribution.
The brands themselves? Just another casualty of the well-demonstrated trend towards "category-killer" retailing, globalization.
One additional thought.
If, a luxury brand-oriented manufacturer, and I refer to LVMH Moet-Hennessey, Louis Vuitton, were to consider adding this portfolio of brands to their stable of over 60 prestige brands, well, that might be something worth doing. Notwithstanding the differences between jewelry, and leather, and brandy, and neckwear, a portfolio of high-end electronic brands could find a profitable home in that environment.
After all, what self-respecting sheikh with his own 747 could resist a $500,000 custom designed and installed home theater system, "on the go?"
Same for his custom-designed 160 foot yacht, and $70,000,000 condo in Qatar, or 20 other cities.The number of multi-millionaires with "luxury" appetites is over 20,000,000 and growing by 100,000-200,000 a year or more. That's a lot of prestige brand marketing opportunities.
If luxury brands and prestige have a place in the world, and they do, Best Buy isn't the "best" home for them.
If they are just commodities, then Wal-Mart may offer as much, or more, opportunity.