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HTSA Looks To More Categories To Expand Profits

3/14/2007 12:53:00 PM Eastern

Savannah, Ga. — Richard Glikes, executive director of the Home Theater Specialists Association (HTSA), pinpointed five categories, including furniture, control and automation, networking, audio and lighting, in which he sees significant profit potential for the group’s traditionally video-centric dealers.

The strategy, a more comprehensive take on a previously announced push for an expanded category focus, was announced during the high-end A/V buying group’s 10th annual spring conference, the Soigné Soirée, held here at the Hyatt Regency hotel March 11-14.

HTSA also announced that it is abandoning its traditional direct-mail campaigns and newspaper advertising for a new marketing model that emphasizes its consumer Web site and custom-published consumer magazines.

Glikes explained in an interview with TWICE that he sees the five targeted categories as ones that the $500 million group’s generally high-end customer base can support. For instance, “People who will spend more on a cabinet than a TV — and that’s a good thing,” he said.

Glikes is positioning his argument for broadening the group’s focus as a necessary adaptation to a changing marketplace — a survival strategy for an organization whose current business model is extremely dependent on the video market — and sees tumbling flat-panel prices and low-margin predictions as a wake-up call to expand and change.

“Basically, we can’t be in the $999 for a 42-inch TV bracket,” said Glikes. “It’s not our customer and nobody is making money there anyway.”

He continued, “I always say it’s not about how much business you do — it’s about how much money you make,” explaining his philosophy that retailers need to focus on profit vs. market share.

Glikes blamed “oversupply” as one of the main reasons for the recent price declines in the video market and said he expects to see 20 percent to 25 percent price declines within the flat-panel category this year alone. He said he doesn’t expect the market to turn around for about another three years and that he doesn’t anticipate that a change will come until some manufacturers really begin to feel the effects of the margin declines.

“Traditionally it was retailers [who went out of business] but now it looks like we’re going to see a change and might lose some vendors,” he said. Glikes said he thinks that the manufacturers most at risk are what he calls “tier-two people,” who have fairly well-known brands “but [who] don’t make it themselves.”

Glikes used the kick-off meeting as an opportunity to readdress his strategy for “reinvention,” which he first announced earlier in the year. He said that he felt his comments had been “misconstrued” in the past and made an effort to clarify his position.

After reading aloud excerpts from a selection of published articles on the topic from earlier in the year, Glikes went on to address the crowd of vendors and members saying “There’s a misconception that we don’t want to sell video — that’s not what it’s about.” He said that instead the organization’s members were simply going to widen their focus, “something that compensates for lower margin expectations [in video].”

Glikes also used the meeting to provide a general outline of the rest of his goals for the organization for 2007, including continuing to focus business on existing vendor partners, improving communications, improving HTSA’s suite of services and staying ahead of industry trends.

HTSA is also abandoning its traditional marketing model which consisted of conventional direct-mail campaigns and newspaper advertising in favor of what Glikes described as a more modern approach. The group is hiring a public relations firm to help it revamp its strategies, and its new marketing moves will include an increased Web presence through its consumer site, www.myhtsa.com, and the production of what Glikes called quarterly “tailor-made magazines” to be sent to consumers. He said the new approach will allow the organization to “attack the luxury market from a different angle.”

Finally, the group has also recently partnered with three new vendors including TiVo, Touchstone Home Products and Sligh Furniture. It has also brought its member numbers up to a total of 57 with the recent addition of A/V Excellence, Jamieson’s and CSA.

According to Glikes, approximately 210 people attended the gathering, which featured a variety of events including group morning meetings, scheduled tête-à-têtes between vendors and retailers, guest speakers and a variety of vendor-sponsored cocktail hours and dinners. The business-related events were broken up by a spate of scheduled leisure activities like boat rides, golf outings and city tours that the attendees were invited to participate in along with their families.