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Dealers Diversifying Through Industry Downturn

4/09/2012 12:01:00 AM Eastern

NEW YORK — When the going got tough in CE and
appliances, the toughest dealers got going by broadening
their assortments into new and varied product
categories.

Recalling their entrepreneurial spirit — and leveraging
the web and their buying groups — retailers have
ventured beyond their comfort zones to mine fresh
profits from the prosaic (mattresses), the trendy (designer
sunglasses), and just about everything in between.

Indeed, some CE and majap dealers have strayed
far afield in search of new margin-rich categories to
mine. Abt Electronics, for one, last year added electric
generators, sump pumps, fitness equipment and
HVAC systems to a diversified mix that also includes
fashion sunglasses and luggage. The moves followed
successful forays into luxury wristwatches and gourmet
cooking products — both of which are backed
by dedicated in-store boutiques — and even a stab at
audio importing and product marketing with the MK
Speaker brand. “We’re always looking for new ways
to drive traffic and create new business,” co-president
Billy Abt recently told TWICE.

George Manlove, president/
CEO of Montana-based Vann’s,
similarly hedged his CE and appliance
bets with last year’s launch of
BigSkyCountry.com, a specialty ecommerce
site for outdoor apparel,
climbing and hiking equipment, and related electronics,
including digital imaging, GPS devices and headphones.
Leveraging his home state’s outdoor heritage
and an e-tail skill set gleaned from 15-year-old Vanns.com, Manlove created an online store that goes “beyond
the routine e-commerce experience by offering
an engaging, educational customer experience,” the
company said.

On the brick-and-mortar side, Manlove moved beyond
Vann’s five-store footprint and put his Apple authorization
to good use by opening his own version of an Apple
store in Missoula, Mont.’s Southgate Mall. The twoyear-
old On Store, self-described as
“the Missoula Apple store,” offers
“anything Apple,” as well as a tightly
edited offering of non-Apple A/V
and PC products and connected
services including streaming media
and home networking.

The 4,500-square-foot shop is also an authorized Verizon
wireless retailer and, taking another cue from Apple
Stores, offers a litany of in-store PC services, including
computer repairs and tune-ups, data transfer and
backup, tablet setup and private IT tutoring sessions.

Custom installers are also finding alternative channels
to help them ride the housing downturn. Despite mixed
results from a recent certification program in photovoltaic
(PV) solar-energy system design, integration and
installation, the Home Technology
Specialists of America
(HTSA) is still finding fresh
opportunities in energy management.
Bob Hana, managing
director of the buying group for
installers, integrators and A/V
specialty dealers, noted that
many members are also “balancing
their portfolios” by turning
to the light commercial market,
where “a large percentage
of businesses is being done.”

Vance Pflanz, principal of
Home Entertainment Source
(HES) member Pflanz Electronics,
concurred. “We do quite a
bit of commercial work,” which helps smooth any bumps
in his core premium A/V business. “It’s been pretty
steady,” he said.

Besides commercial automation, HES executive VP
Jim Ristow advises his group’s specialty A/V and custom
install members to tap into potential
profits from LED lighting; headphones,
wireless powered speakers
and ultra-premium soundbars; Elite’s
receiver, TV, and client eco-system;
Zvox’s single-cabinet home-theater
systems; and the emerging mainstream
control and integration market.

More traditional CE and majap dealers should also
consider lighting control, which, argued Jeannette
Howe, executive director of Specialty Electronics Nationwide
(SEN), a division of the Nationwide Marketing
Group, is no longer exclusive to integrators and custom
installers. “The lighting category can be highly profitable
and is not challenging to implement,” she noted.

Housewares, long a shelf presence at Best Buy, are
also serving as a high-margin adjunct for independent
CE and appliance dealers. Leveraging its Kathy Ireland
licensing agreement, the BrandSource buying group
has developed branded cutlery, food storage and countertop
cooking products that are exclusive to its members.
CEO Bob Lawrence also pointed to PureWash,
a $399 water-treatment laundry
attachment shown at the
group’s recent spring show, as
an easy “no-brainer” that helps
improve both the wash and
dealer margins with it 45-point
markup.

Also expanding into housewares
is New York-based Data-
Vision, the Fifth Avenue CE and
IT emporium. It’s new home
line, which includes cookers,
toasters, blenders and other
countertop appliances by such
brands as Sunbeam, Crock-
Pot, Krupp’s and Hamilton
Beach/Proctor Silex, represents
a fresh vein of online revenue, president Albert
Liniado noted. In particular, Keurig’s coffee brewing
systems and Dyson’s premium floor-care products are
generating “tremendous numbers,” Liniado said.

More recently, DataVision broadened its virtual
boundaries further still by introducing
250,000 SKUs of hand tools to
its main Datavis.com e-commerce
site under such top brands as Black
& Decker, DeWalt and Stanley, and
may soon add toys to its burgeoning
online mix.

Playthings are already a growing
business for fellow Manhattanite J&R Music & Computer
World, which recently announced its own new arrival:
J&R Jr., a new 15,000-square-foot “super boutique”
boasting a tightly edited assortment of parenting essentials
including cribs, car seats, strollers, furniture, musical
instruments, crafts and books. The new shop, located
in the retailer’s former computer software section,
also features dedicated walls and displays for electronic
toys, gaming consoles, kids’ media players, tablets, A/V baby monitors and other small electronics and
housewares.

J&R Jr. was conceived and merchandised
by executive VP Jason Friedman and his wife
Danielle based on their experiences as parents
and the company’s recent forays into educational
toys by VTech and Leapfrog. Indeed,
the latter’s LeapPad Explorer learning tablet
was “our hottest seller at Christmastime,” he
told TWICE at the shop’s grand opening.

CE dealers looking for less esoteric adjuncts
have also found succor in major appliances, a
mainstay of many a merchandise mix. Despite
a mushrooming furniture business Conn’s said
majaps will remain its core category, and Rick
Bellows, group president and chief appliance
merchant of the Mega Group USA buying organization,
argued that white goods’ quick turns,
greater sales-per-square-foot and high-traffic
draw make for a productive investment on the
sales floor. To that end, Mega has worked with
Whirlpool to develop a turnkey “Appliance Gallery”
in-store shop that provides members an
easy entrée to the category with training, signage,
delivery and pre-arranged terms for a
tightly merchandised assortment. — Additional
reporting by John Laposky