Howe Sees Opportunities For Specialty A/V Dealers

By Steve Smith -- TWICE, 8/19/2008

Las Vegas — The Nationwide Marketing Group’s Specialty Electronics unit is diverse enough to tackle the challenges facing custom installers in the period leading up to the holiday selling season.

That’s what Jeannette Howe, Nationwide’s executive director of Specialty Electronics, told TWICE at the start of the organization’s PrimeTime! meeting, here at the Mandalay Bay Resort, on Aug. 18.

Nationwide's Jeanette Howe

Howe said her division of 450 retailers, with 60 “core” dealers have annual sales upward of at least $10 million a year, that are a “diverse membership, some sell appliances, others are RadioShack licensees ... that sell a variety of products.” Howe said the division has annualized sales of around $900 million.

The key to the division’s business is video, and even though there has been a “consolidation of suppliers,” as Howe put it, “there is a lot of business to be done. The converter-box business has been big. We are oversold by 15,000 boxes and will get more soon.”

Howe, a major supporter of the program, said not only will there be “huge sales in the fourth quarter,” but when consumers see a 16:9 picture on their analog tube sets, “consumers will be confused. Some may come back to the store” and buy HDTVs.

In HDTV, she cracked that third-tier HDTV suppliers “have now gone into the cable-box business,” leaving a consolidation of larger players, so Howe hopes “we won’t see this year what we saw in [the fourth quarter] of 2006” in terms of pricing, since major vendors have control of screen supplies.

Howe noted that during the fourth quarter, due to the 2009 DTV transition deadline, flat-panel TVs will be “very popular ... plasma will sell, but there will be plenty of LCD TVs sold.”

She is hopeful that if gasoline prices continue to drop, “and we can get through the [presidential] election,” the economy will get stronger. “The problem is gas prices increase the price of everything. And, that said, retailers have to realize that customers who visit their stores mean they have become a ‘destination location.’ Those consumers better have the best experience possible in that store and sell them.”

Howe added that today, “Consumers, who can afford to shop, don’t have the time to do it,” and she cited Consumer Electronics Association figures saying that the average consumer spends 12 hours online researching a CE purchase before shopping.

In audio, Howe said sales for her group “have been strong and continue to stay strong.” While MP3 and iPod are popular, the key with those formats is “portability, but it doesn’t produce the entire experience. It can’t replace the experience of hi-fi or distributed audio.”

She sees a “generational thing” at work here but suspects when younger consumers get older, “They will want distributed audio.”

And Howe noted that many gamers want 7.1 gaming systems “and a big screen with full surround. I’m telling our members to put in a 7.1 gaming system to get younger consumers. And demographically, women over 40 have become big gamers.”

To that point, Howe added that major CE purchases are now “family purchases, and who writes the checks and decides? Women. I have told our members that if you don’t gear a lot of your operations to women and try to merchandise and sell to them ... you are losing a huge part of potential sales.”

As for specialty CE competition, Best Buy in particular has made inroads in installation and service over the past several years, with the chain having a major chunk of its installers trained by the Imaging Science Foundation.

That’s why Howe is emphasizing Imaging Science Foundation (ISO) and had a test class at PrimeTime! this week, which was sponsored by Sencore.

“Independent dealers have been out-servicing national chains for years. Best Buy has increased its ISF training, which is why we have the demo class here.”

She added, “These classes show we have to make an emotional connection with our clients, better than mass merchants. These classes show that good demonstrations can make consumers laugh, make their hearts beat fast and make them, in certain cases, cry with compelling demos.”

Howe said that’s the way specialty dealers can “sell the experience” of upscale A/V systems.