HTSA Members Outperform Ecomomy

CHARLESTON, S.C.— Independent audio/video specialists have outperformed the economy, thanks to continued demand for custom installation, retailers and suppliers said during the semiannual Home Theater Specialists of America (HTSA) conference.

Almost 200 people attended the buying group's event in the downtown historic district here.

Representatives of 40 specialty dealers and 37 suppliers negotiated deals and listened to advice from marketing consultants on such topics as marketing to women and empowering staff to make decisions on their own. The group, whose 45 retail and installer members operate from one to seven stores, generate $400 million in combined revenue.

For most specialists, slower economic growth and terrorist attacks flattened or reduced retail sales last year, but custom revenues continued to grow, although at a slower rate, HTSA attendees said. As a result, most independent specialists and small chains posted revenue growth in 2001, and in recent weeks, the economic recovery has begun to lift sales further, they said.

"Custom was a lifesaver for everyone last year," said Harvey Electronics president Franklin Karp. "Rich people are still rich."

Retail sales began turning around late last year or early this year, depending on the retailer or manufacturer interviewed. Custom revenues, however, might take a few more months to resume their usual +20 percent growth rates because of a dip in contracts signed during the months after Sept. 11, they said.

"A lot of business should have been written last September through November," said Eric Bodley, president of Home Entertainment Designs of Bonita Springs, Fla. "If you weren't doing prewires then, you don't have business now."

Dealers such as Harvey and Audio Video Environments of Franklin, Tenn., noticed a dip in new custom contracts after Sept. 11, but both dealer/installers said the number of new contracts is picking up. "Last year, prewires slowed a little, but new orders are back up," said AV Environments GM Dick Van Amerongen. Said Harvey's Karp, "New contracts are definitely coming back."

For Van Amerongen, custom revenues grew last year, but retail sales fell, yielding flat revenue overall, but so far this year, total sales are up about 10 percent. he said. He noticed foot traffic picking up at the end of February.

For Harvey, retail sales slowed during July through October, except for flat-panel TVs, Karp said. "This year, retail for us is strong. If you advertise, you get share." Harvey is also enjoying "big growth in custom," he added. "Last year, it accounted for 40 perecnt of sales, and it's now tracking ahead of that."

Industrywide, he said, "a lot of dealers saw a slowdown last year, but they weren't crying. It was still a pretty good year. It was up."

Said Escient president Bob Pankratz, "Dealers were pleasantly surprised that sales held up and are now turning around. Some custom sales were deferred six months. Some were scaled back. But the majority went through, and delayed projects are now being done."

Paradyme owner Leon Soohoo attributed his continued strong growth to the opening of a second store, custom's resiliency and consistent promotion of plasma and HDTV during the past three years.

"We had a big bump in retail because of TV, and custom was very strong." Paradyme has been "consistently pounding the [flat-screen and high-definition] message for the past three years, and we've been getting dividends," he said.

Traffic fell in September but "came back with a vengeance in November," he added. "After 9/11, people were investing in their homes."