Tweeter's Future
By Steve Smith -- TWICE, 9/3/2007
Just two weeks or less before the opening of CEDIA Expo one of the retailers that the event was designed to serve cut more employees, including its president/CEO.
The sliding fortunes of Tweeter over the past year (see p. 1) has been a sad tale because it has been an innovative A/V chain most its life since its founding in Massachusetts in 1972 by Sandy Bloomberg. He always said that he opened Tweeter because he loved music and the audio equipment of the era. He had a passion for the industry.
I'm not saying that recent top executives at Tweeter didn't have a passion for the products and the industry. Current and former employees certainly do if the many "Talkback" entries at TWICE.com whenever we report on Tweeter's latest moves are any indication.
But decisions that were made in the past decade seemed to show the chain's leaders as more corporate managers who were less connected to the products they were selling and the customers they were selling them to.
A decade ago Tweeter began to expand, by buying well-regarded regional chains across the country. In the first few years of this expansion I, for one, always thought that its up and down financial performance was due to buying too many retailers too quickly. I couldn't believe the problems involved its merchandising and marketing skills. Turns out that was part of the problem too.
Tweeter, and the execs that came along with the acquisitions, had to quickly create what amounted to a quasi-national chain. But Tweeter's management and the chains they bought were used to running regional operations. Tweeter wasn't a real national player and it wasn't a small regional. It was distinctly in the middle, not the place to be in this business when you're trying to reinvent yourself.
As HDTV began to drive more consumer appetites for mid- to high-end home theater and custom installations, Tweeter's traditional strength, it took its eye off the ball. Among other things the chain became more concerned about was store traffic, and trying to carry some low-end product to get that traffic, and the national chains made them pay dearly for it.
Everyone I speak to in this industry, supplier and retailer alike, is rooting for a Tweeter turnaround because they feel the industry needs strong regional A/V chains at their best to explain the latest CE technologies and deliver more margin to manufacturers.
Tweeter needs to get back to its roots, hire and retain people who have a passion for the CE industry and who can merchandise, explain, sell and install mid- to high-end electronics. While there is plenty of goodwill, new Tweeter CEO George Granoff and parent company Schultze Asset Management will have their hands full as we move into the fourth quarter. After all, this is still the CE industry, where cutthroat competition lives.
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