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No Loss For Words At EH Expo, PARA

3/09/2007 08:24:00 AM Eastern

Orlando, Fla. — Infuriating, fun, challenging and ironic were some of the adjectives used here this week by retailers, installers and suppliers to describe the current state of the custom installation and specialty audio/video industries.

Industry leaders spoke of challenging changes in technology and control-system infrastructure, infuriating drops in average selling prices, seemingly paradoxical gains in installation-industry revenues despite declining new-home sales, and minimal builder interest in promoting custom A/V solutions despite rising consumer demand for them.

The observations flew during the spring Electronic House Expo and the Professional Audio/Video Retailers Association (PARA) conference, each held simultaneously but on opposite sides of Orlando’s International Drive.

“These are amazing, weird and exciting times,” PARA chairman Gary Yacoubian said during his PARA conference opening remarks. They’re also “one of the most infuriating and fun times,” he added, citing “incredible changes” in technology and control-system infrastructure, some of it Internet Protocol-based. He also cited “unbelievable declines” in average selling prices in many categories in the fourth quarter.

Despite the challenges, “We are the only ones who choose to completely fulfill the promise of all these technologies” by demonstrating them, installing them and servicing them after the sale, he contended, referring to the PARA channel as the “audio/video specialty/custom installation channel.” In contrast, the custom install channel and big-box retailers don’t do all three, he said.

Demonstration is a key differentiator for PARA’s members, who are hybrid retail/custom installers, but demonstrations need no longer take place only in a retail showroom, PARA executive director Kerry Moyer told TWICE. “The definition of showroom is changing,” he said. Technology demonstrations are also occurring in homes and design centers, he noted.

Although declining selling prices might be infuriating, declining sales of new homes haven’t proven to be so, industry leaders said. “There has never been a higher demand for integrator expertise,” said David Epstein, president of the Sound Solutions custom installation company in Culver City, Calif. “A broadening base of consumers needs specialists to assist them,” he said.

Custom-home builders have been less affected by softening new home sales than production builders, and most of the custom industry’s revenues are generated through custom builders, he said.

Among Sound Solutions’s high-income customer base, “when the economy slows, our business is the same or goes up,” Epstein added. Perhaps people have more time on their hands to focus on their home, he said.

The decline in new home sales has given many overstretched installers some “breathing space,” added Jay McLellan, president of supplier HAI. McLellan said his company experienced a “leveling” in sales in the second half of last year as distributors thinned their inventories in response to slowing new home sales. Now, however, HAI sales are “picking up again,” he said.

Although the sales pace isn’t disappointing suppliers and installers, builder attitudes toward custom A/V must be. A builder survey by the Consumer Electronics Association and the National Association of Home Builders found little interest by builders in promoting custom electronics. Epstein attributed the attitude to a reluctance by builders to promote until their competitor across the street does. Another reason is a fear of callbacks. “Builders want high customer satisfaction levels,” he said.

Added McLellan, “Consumers are more educated than builders,” and the builder installs when the consumer asks, he said.

“We no longer have to explain to people what we do,” Epstein added.

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