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HTSA Sets Goals, Sees Challenges

The Home Theater Specialists of America (HTSA) convened in Maui in mid-March for its semiannual conference, where buying group officials outlined their goals for the coming year and panelists outlined the challenges that home theater specialists face in the coming decade.

Key challenges cited by panelists include the emergence of a bewildering array of digital home network standards and a growing number of competitors entering the custom market from such fields as home security installation.

To help members cope with a changing market, HTSA executive director Richard Glikes announced, one of the group's goals this year will be to "raise the level of custom expertise" among members. In fact, custom consumed a major portion of the agenda at the HTSA spring conference, which included a roundtable discussion and a separate panel in which members and suppliers outlined the challenges in taking custom to the next level. (See next issue for topics raised at the events.)

"In the next year," HTSA president Jon Robbins told TWICE, "we will do more custom-information sharing. Custom is the way to perpetuate the business." Custom will also help HTSA members differentiate themselves from higher volume electronics chains, which are unable to cope with the sophisticated systems that "hands-on" HTSA members can, Robbins added.

"In the [four-year-old group's] early days, only a few of us were in custom," he said. "Now about half the group is doing custom fairly efficiently, and the ones not in custom, we're getting them there."

The group's other priorities for 2000, Glikes said, include stronger vendor programs and the use of members' joint buying power to create quality retail-advertising vehicles that members couldn't afford on their own.

Illustrating HTSA's advertising plan, Glikes distributed the group's second customized newspaper insert, a 12-page four-color home theater guide that explains how to buy home theater and custom-install systems. The insert is customized to include a member's name on the cover and a mix of manufacturer ads tailored to the member's assortment. Individual members sell the ad space for their customized insert, which can include their own message on the back page.

HTSA designed the insert and contracted for a press run of 4.3 million, Glikes said, and "there will be even more in the fall." The advantage for vendors is that "they get national advertising for a very low price, and they get to support their dealers," he added.

The group's first insert was printed last fall, but HTSA started group advertising "a couple years ago," Robbins said, with manufacturer-specific tri-fold mailers and 30-second cable-TV ads.

As for vendor programs, "We want to deepen them," Glikes said in citing late 1999's loss of two members -- Myer-Emco and Audio Video Systems -- to the PRO buying group.

Despite the loss, HTSA has expanded its membership since 1996 from an initial five to a current 45 specialists, who operate about 86 storefronts and do combined volume of about $400 million, Glikes said. "About 50 members is as many as we want, or the meetings become unwieldy," he noted.

Members' annual volume ranges from $3 million to more than $30 million, with most members doing $8 million to $12 million. All are upscale, independent A/V specialists who don't sell white goods.

Robbins said HTSA will meet one-on-one with vendors to develop strategies to strengthen their programs. All told, the number of vendors offering programs to HTSA members is 45, including four vendors -- DirecTv, Faroudja, Panja and Teac -- that in recent months initiated programs for HTSA members.

"We don't have programs with everybody because then we wouldn't have programs with anyone," said Glikes, who added that vendors don't have to sell every HTSA member.

Most of HTSA's vendors -- about 75% -- are audio suppliers, differentiating the group from other buying groups that mainly serve independent appliance/electronics dealers, noted Glikes. Most of HTSA's vendors are upscale audio suppliers whose products require a level of selling expertise that appliance dealers don't usually deliver.

HTSA's video vendors include Faroudja, Marantz, Panasonic and Toshiba. Furniture and accessory vendors also have HTSA programs.

HTSA's vendor ranks reflect the group's mission since its 1996 founding by three A/V specialists who, Glikes recounted, "had to sit through icemaker presentations [at appliance/electronics buying group conferences] before getting information about a Mitsubishi rebate." Since then, appliance/electronics buying groups have tried to serve A/V specialists better, but their electronics vendors are mainly video vendors.

As part of its growing emphasis on custom, said Robbins, HTSA is "looking at a few more niche custom vendors" to supplement existing custom vendors, which include Niles, Sonance and Panja.

Although HTSA has filled a niche by emphasizing access to audio lines, marketers admit that video drives the audio business at retail and in custom. "Video brings customers to stores," said Pioneer executive sales VP Ed Sachs, "and then you manage the audio portion after."

Most consumers, Sachs added, "don't look to a consumer electronics stores as an audio destination." Yamaha sales VP Steve Caldero agreed and said, "High-end video brings them into the store and gives you the opportunity to sell distributed audio."