Harvey Electronics will begin implementing a new multi-part strategic plan, the first following its buyout and recapitalization last year by an investment group led by Trinity Investment Partners, in an effort to return the A/V chain to a path of growth and profitability.
Interim CEO Martin McClanan said the company will use a $4 million capital infusion from its new owners to launch new marketing, merchandising and store remodeling initiatives that leverage the chain's "strong brand awareness and competitive advantages in the high-end custom installation market, where we see the greatest opportunities." McClanan joined Harvey in November from Red Envelope, the online gift store, where he was CEO.
"We are reinforcing who we are," McClanan said.
Harvey has retained a new ad agency that specializes in luxury brands, and plans to increase its ad expenditures by nearly 50 percent this year, targeting traditional media as well as direct and online marketing. McClanan told TWICE that the Internet has been sorely underutilized by Harvey and by the custom install business overall. "We missed a big opportunity, and the whole industry is missing the boat," he said. "The online experience is not as satisfying as it could be."
To that end, Harvey will launch a new Web site this summer that's focused on "educating our customers about both our products and services and about how Harvey is uniquely capable of bringing these exciting new technologies into their lives," in order to drive sales leads into the stores.
At the same time, the company will invest in store remodels, "more innovative products," and more frequent assortment updates, he said.
"Hand-in-hand with this more aggressive marketing strategy will be improvements in our in-store merchandising," McClanan said. "In particular, Harvey will focus on compelling new product offerings to attract high-end customers into our stores such as the introduction of innovative control devices, content management tools, and cutting-edge high-definition audio and video products." He cited as an example Niveus' new Vista Ultimate media servers, which integrate the new operating system with cable TV, lossless audio, HD video and high-resolution photography.
McClanan cautioned that the turnaround will not happen overnight. "While we are starting to see improved store traffic from our initial advertising and sales efforts, we expect the negative impact of flat-panel price compression to continue to hinder the company from reaching profitability in the first quarter of 2007. Therefore, turning around Harvey will require the continued patience and support of our business partners and our shareholders as these initiatives are either only a few weeks old or have yet to be fully implemented."