Custom Installer Versus Shops
Dear Gary:
You are welcome to respond to this if you like.
Dear WSR Contributor Terry Paullin:
You [Terry Paullin] wrote a great article in AVAD's Gearhead December 2008 issue where you indicate you've been an AVAD re-seller for more than ten years. Are you aware that in one of the magazines you contribute to, the editor professes that manufacturers of high-end products should not market through large distributors such as AVAD and its competitors servicing the custom installer? The magazine stresses that such products should only be sold to specialty retailers. While I believe in freedom of the press and one's opinion, I sell many of the products advertised in that magazine and do not want vendors to limit my ability to make a living.
As a custom installer for the last 15 years, I believe if manufacturers did this, it would severely limit the business of thousands of CEDIA members. Can you share your opinions? My company wants to continue to be able to sell $100K+ systems and not be limited to $199 receivers or HTIB's.
Dave Hirsch, Horizon Install Group, Inc., Northridge, California
editorgary@widescreenreview.com
Editor-In-Chief and Publisher Gary Reber Comments:
Terry Paullin passed your letter on to me for comment. I do believe that the performance end of the consumer electronics industry needs to get back to traditional specialty brick-and-mortar retail establishments that can properly present performance products and conduct demonstrations of such to prospective buyers. Without this there can be no appreciative growth in the high-end music and home theatre performance experience.
As I stated in my previous “Editor’s Couch” (Issue 139, March/April 2009), traditionally, the specialty dealer has provided face-to-face education, product selection, demonstration, and service. Manufacturers traditionally supported this channel and relied on these dealers to reinforce product brand awareness and performance through education and demonstration.
In the last decade, manufactures began to pay more attention to new product delivery channels to grow sell-through numbers. This has resulted in manufacturers supporting discount warehouse retailers, online Internet stores, and individual or small company “custom installers,” serviced by large distributors (AVAD, for example), who stock product for these new sales channels.
As a result of this shift in manufacturer support, the specialty retailer is now unable to compete with “sales” operations that have no comparative costly brick-and-mortar operations, nor can they avoid, as do many Internet companies, collecting the sales tax. Nor can they compete with warehouse retailers who operate on extremely low profit margins and provide no product education or consultative sales support. Warehouse discount and Internet retailers can operate on far less profit than specialty retailers, who thus cannot compete on price. Without profitability, there is no prosperity.
This scenario more often than not leads prospective buyers to search out “dealers” (if they can find them) who can provide education and consultative sales support, but who then search the “Internet” to find the lowest-cost availability. This availability ends up typically not being a specialty dealer, or for that matter necessarily a “custom installer,” because manufacturers have allowed their products to be sold without the requirement of demonstration and education. This is the point I wanted to make.
Thus, in the long-term interest of a sustainable high-performance market, with manufactures continuing to innovate and raise the bar of performance, I believe this segment of the industry needs to return to strengthening the specialty dealer with brick-and-mortar establishments who can properly educate, demonstrate, and provide consultative sales support for high-performance products.
Such a specialty dealer makeup does not necessarily exclude “individual” custom installers, who function and operate with such capabilities. The aim should be to sell performance products through qualified “dealers” with proven demonstration capability and who can properly educate consumers on the technologies and performance nuances.
Performance-product manufacturers need to support such qualified “specialty retailers” directly or through their distributors. If the performance manufacturer uses distributors, then distributors should be required to showcase the manufacturers’ product and provide an open sales floor for “individual” custom installers to take their prospective customers to—though the latter approach is extremely limited geographically, as there are few distributor locations. Distributors, with manufacturer support, should require minimum inventory investment on the part of the “custom installer” and extend credit to finance the inventory requirement.
Another approach is for groups of complementary performance-product manufacturers to join forces and open chains of brick-and-mortar stores for custom installers to use for education, demonstration, and consultative sales support.
Whatever the approach, the end result desired is to provide prospective buyers with facilities in which to become educated with performance products properly demonstrated. Without education and demonstration, the performance segment of the consumer electronics industry will not be sustainable, and people will be limited to broadly marketed product commodities sold at the lowest price. Whatever high-end performance-product market that survives will become extremely limited, and the overall growth of a population of consumers appreciative of high-performance products will continue to dwindle.
You can E-mail Widescreen Review @ editorgary@widescreenreview.com