Tweeter Demise Ends Era In CE Retailing
By Alan Wolf -- TWICE, 11/17/2008
CANTON, MASS. — Tweeter, which briefly realized its vision of becoming a national A/V specialty chain, may have reached the end of the road after 36 years in business.
The company, founded in 1972 by Massachusetts audio enthusiast Sandy Bloomberg, filed for Chapter 11 protection in a Delaware bankruptcy court this month after shutting its distribution centers, dismissing its headquarters staff and commencing going-out-of-business sales at all remaining 94 stores.
According to petitions filed under the names Tweeter Opco, Tweeter Newco, Tweeter Tivoli and Tweeter Intellectual Property, the retailer faced "a severe liquidity crisis brought on by slow sales caused by declines in discretionary consumer spending."
The chain, which was acquired last year by Schultze Asset Management after a previous bankruptcy filing, estimated its liabilities at between $50 million and $100 million.
Sony is the company's largest unsecured creditor, with claims of $1.7 million, followed by Samsung at $865,555 and Pioneer at $554,814, according to the filing.
Tweeter's other largest claimants include Panamax ($315,066), Alpine ($308,387), Omnimount ($285,614), Panasonic ($276,750), Service Net ($275,674), Mitsubishi ($193,411) and Martin Logan ($166,025).
Tweeter acknowledged in the filing that it began store-closing sales through a joint venture with liquidators SB Capital Group, Tiger Capital Group and Hudson Capital Partners, and will continue to operate the business as a debtor in possession.
The company also notified a Massachusetts state agency that it will be shutting its headquarters here by Dec. 31 as part of a "permanent entire company closing."
The company presently manages 94 stores in 17 states under the Tweeter, Sound Advice, HiFi Buys and Showcase Home Entertainment brands, which were hobbled together in the late 1990s and early 2000s with an aggressive growth-through-acquisition strategy.
But the company never successfully integrated its far-flung operations and disparate cultures. It was forced to shed stores and exit markets as high-end audio became passé, restricted brands and custom installation became widely available and flat panel pricing fell to commodity levels.
Whether elements of the chain will be bought and re-launched online or in select markets remains to be seen, although industry observers believe that is doubtful given the weak economy and tight credit markets.
Clickhereto read TWICE's complete coverage of Circuit City and Tweeter.
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Tweeter never specialized in High End Audio. Rather, they specialized in Middle Fidelity Audio and flirted over the years (with varying degrees of success) with High End Audio. The High End portion of their business did not become passe, but the sales approach sure did. I was a part of their only successful venture selling High End Audio and it worked for the better part of 5 years. Why did it work and why did it fail? Simply put, it worked because ordinary people who did not know that the High End existed came in the store to buy high value middle fidelity audio and video. Highly trained salespeople who understood the value of a great demonstration said to these customers "hey, do you want to hear something fantastic." Know what happened? People were blown away by sound that they did not know was possible and they bought. When they did not buy they convinced themselves that maybe there was room in their budgets for better Audio. Not exactly rocket science.
So, why did it stop working? A new generation of Corporate Executives believed that the future of Tweeter was in custom installation (right idea, wrong execution) beautiful stores and new digital technologies. As a result, the people who "got it" and made the original company successful were sidelined, training was slashed and successful merchandising that allows for great sounding audio systems was gutted.
The audio did not become passe- The company forgot the basics which have never changed. If you want to sell above commodity level products (and this was the core value at Tweeter for decades) you have to build value and sell up.
Patrick Butler - 2008-20-11 09:46:00 EST -
This guy couldn’t be any more correct. I AM a "high-end audio/video" company owner and when I was just a tech, tweeter came in and bought the company I worked for and subsequently ran that great company into the ground. I have always had great detest for tweeter because of this. I can tell you from an insiders point of view that tweeter’s business philosophy was upside down and backwards so much so that even most dim of employees knew that they needed to get off the boat before it sank. Their approach to "custom audio/video" was completely absurd. (1 example: paying their "custom installers" on a commission scale which basically meant we would have to install 3 theaters a day to even survive. That pretty much throws “custom†and client satisfaction right out the window. They had NO idea what they were doing in the custom industry and thought that buying up every custom company in the nation would teach them something. They were a mediocre big box store at best and that’s why they are closed. Ha! I saw coming 6 years ago, good riddance.
My other point to this obviously disgruntled person is that “High-end custom audio/video†is in fact HIGH END. Not everybody can afford it and not everybody wants to. All of my clients live in multi-million dollar homes and people with that kind of money do not feel the same way you do about the industry. There IS a custom market, but it is no place for public companies.
Rant over
Aaron Cantrell - 2008-19-11 22:37:00 EST -
Don't get me wrong. I'm all for high-end audio and video. But let's face reality. People want simple, sleek, affordable, and accessible. Watching movies and listening to music has really become communal, commodity, and consumable. And in this day and age, where time is precious and money even more so, the days of spending a small fortune just to be "more perfectly engineered" (so you can one-up the Jones') has not only become passe, but expired as well.
