Sony’s Mike Kahn talks about instant rebate changes and unilateral pricing

Mike Kahn

I promised you I’d write about some interesting comments made during Thursday’s 2013 PMA@CES Official Business Session. After the moderator had completed his list of questions for our Visionaries Panel, emcee Mark Comon took questions from the audience. Bill McCurry posed a tough one. He said he has heard several retailers complain that they can’t pay their bills, because so much of their money is tied up in instant rebates. What could be done about that?

Sony’s Mike Kahn said the instant rebate trend has arisen in response to the earthquake in Japan in March 2011, followed by flooding in Thailand, which impacted manufacturing. “The concept, originally, with instant rebates, was to draw attention to being back in stock and coming out with our inventory, and then offering a sale,” Kahn said.

Kahn acknowledged that photo retailers are being forced to carry the cost of the instant rebates while waiting to receive their sales credit from the manufacturer.

“Once you start going down the instant rebate road, it’s hard to turn the ship. You wind up getting into more and more and more, if you don’t have a response, you’re not considered competitive,” Kahn said. “[Sony is] trying different ideas. We’re starting to do a little more bundling with accessories, sometimes bundling with lenses, and still offering a value by not relying necessarily on an instant rebate.

“I’ll tell you what,” he continued. “If you can partner with me on promoting the products, advertising them and getting the flyers out there, I’ll commit to you that we’ll help you fund that vehicle, and together we can come up with a different solution.”

What kind of different solution? Sony is uniquely positioned to provide consumers with some other valuable perks, in place of the instant rebates, he said.

“We’re looking at ideas. The nice thing about Sony is, we make more than cameras, TVs, and tablets. We also have a music industry; we also have a movie industry. I want to try different tactics, like giving customers opportunities when they come into your stores to buy a camera,” he said.

For example, giving retailers the ability to provide customers with a shooting experience from Sony, or an exclusive invitation for retailers to bring customers onto a Sony movie lot. “Valuable? Absolutely. But no hard dollars are changed, so you don’t have to worry about rebate checks making you whole at the end of the month. How does that sound? Are you excited about that kind of idea?” Kahn said. The audience answered with enthusiastic applause.

  Mat Inkley of the Imaging Depot in Ogden, Utah, then asked how brick and mortar independent retailers can compete with online dealers who can acquire equipment at a lower price.

“One of the things we have done at Sony, and I think you will start seeing more and more in the industry, is that we have created Sony Unilateral Retail Execution — SURE unilateral pricing,” Kahn said. “SURE pricing ensures that if you’re selling a Sony Alpha camera or NEX, whether you’re online or in the store, it’s going to be the same price, regardless. If an authorized retailer breaks SURE, then for 30 days they aren’t selling our product. Break it again, 120 days. Break it again, and we can stop the contract. We will stand behind that.”