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Vendor Pricing Policies, Group Programs Could Restore Profits: HES

2/27/2012 12:45:15 PM Eastern

Orlando, Fla. - Home Entertainment Source (HES) is looking to new
unilateral pricing policies by video manufacturers, and group support of dealer-friendly
vendors, to help return profitability to the TV category.

Addressing members and manufacturers during the buying group's
spring Summit meeting here at the Marriott World Center, executive VP Jim
Ristow said vendors are taking action in response to "a sick industry."

Pricing policy rather than products was the focus at
International CES last month, he said, and vendors appear committed to putting
profits ahead of market share and production.

[Editor's Note: Senior executives at the Nationwide Marketing
Group, a rival independent dealer organization, have separately confirmed that
Samsung will be instituting a uniform pricing policy for TV. Nationwide is
holding its own spring meeting concurrently at the nearby Gaylord Palms
Resort.]

The new policies, plus mounting pressure to enact a national
Internet sales tax collection statute, bode well for the pendulum to swing back
to a more level playing field for brick-and-mortar retailers, Ristow noted.

To further press their advantage, Ristow called on all 550 members
of the $3.6 billion specialty CE and custom-install group to throw their
purchasing power behind the most supportive manufacturers, and to extend that focus
down to even the SKU level.

Ristow also urged members to consider the margin and profit
opportunities for whole-system projects, compared with sales of individual
products, and showcased the group's first two Connected Source showrooms. The
turnkey merchandising and design program was developed to help members tap into
the burgeoning mainstream control and integration market, and features five
in-store stations for demonstrating streaming content; home theater, gaming and
3D TV; distributed audio; headphones; and whole home control.

Other big profit opportunities for dealers include LED lighting,
component audio and commercial automation, Ristow said.

Also addressing the rank and file was HES president David Pidgeon,
CEO of Dallas-based Starpower, who warned that one-third of the industry's
dealer base will dissipate due to changes in the industry and consumer habits,
and independents must evolve with the times to succeed.

Pidgeon later told TWICE that unilateral pricing, should the
policies stick, will help move showroom discussions past TV-model price points
and free up sales staff to attach other products and services.

Bob Lawrence, CEO of parent group BrandSource, also spoke to the
assemblage, telling attendees that HES now represents the buying organization's
largest division. BrandSource's own spring meeting kicks off tonight, and
buying expos for all members will run through Wednesday. - Additional reporting by Steve Smith

Check TWICE.com and the
March 12 print edition of TWICE for further coverage.