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HES Pushes Profit Plans, Backs Vendor Policies

3/12/2012 12:01:00 AM Eastern

ORLANDO, FLA. — Home Entertainment Source
(HES) is looking to new unilateral pricing and online
sales 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
now appear committed to putting profits ahead
of market share and production.

The new policies, plus mounting pressure to enact
a national Internet sales tax collection statute,
“all bode well for the pendulum to swing back” to
a more level playing field for independent dealers,
Ristow noted.

“It’s a great first step to bring back profitability, if
the polices can be executed,” he told TWICE.

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 in whole-system projects,
compared with sales of individual products,
and to tap into the burgeoning mainstream control
and integration market.

Winning that category is dependent on demonstrating
“abstract concepts” like Skype and Apple’s
streaming AirPlay platform, which HES is addressing
with Connected Source showrooms. The turnkey
merchandising and design program, which was piloted
with members Talk of the Town and Five Smooth
Stones, features five in-store stations for demonstrating
streaming content; home theater, gaming and 3D
TV; distributed audio; headphones; and whole-home
control.

All are being fueled by the “Trojan horse” that is
iPhone and iPad, as well as other smartphones and
tablets, which can function as low-cost controllers,
Ristow said.

Other profit opportunities include commercial automation;
LED lighting; audio, including headphones,
wireless powered speakers, high-end components,
and premium $1,500-$7,000 soundbar systems; and
Elite’s receiver, TV, and client eco-system, he said.

TV also offers promising advances, including glasses-
free 3D, super-slim OLED displays, voice and gesture
control, and 4K panels, Ristow said.

On the distribution front, the group’s in-house logistics
program, Expert Warehouse II, has now doubled
its inventory from last year as new manufacturers like Denon, Marantz, Paradigm, and more recently Klipsh
and ZVOX Audio, join the ranks.

Other new additions include:

• Lutron’s battery-operated shades, available for
limited distribution through the group’s Custom Warehouse
program;

• new direct programs with Cinemacoustic Solution,
makers of custom home theater interiors and acoustic
treatments, and Salez Toolz, for sales, budgeting and
presentation software;

• and new partnerships with Runco, Savant, Sim2
and Vutec projector screens.

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 changing consumer habits and industry
trends, and that independents must evolve with the
times to succeed.

Echoed Ristow, “We have been clerking panels, and
we need to get back to top-down selling.”

Bob Lawrence, CEO of parent group BrandSource,
noted that HES now represents the buying organization’s
largest division, and that CE has supplanted
major appliances as the group’s largest category. CE
comprises 40 percent of BrandSource volume, he told
TWICE, compared with 35 percent for majaps and 20
percent for furniture.

Elsewhere at the HES Summit, power management
supplier Panamax/Furman presented its 2011 HES
Dealer of the Year Awards to AVIO, DSI Entertainment
Systems and Premier Custom Audio & Video.
The company, which has been an HES vendor partner
since 2008, said it created the awards to recognize
the group’s dealers for using its extensive product line,
which can “address all of an installation’s power needs
while maximizing profits.”

Winners were selected based on the growth of
their business with Panamax/Furman, and success in
representing the BlueBOLT energy management and
control platform.

Based in Troy, Mich., AVIO was honored with an
award based on its significant increase in sales over
2010. DSI Entertainment Systems, headquarted in
Lake Balboa, Calif., also posted a sizeable year-overyear
sales increase, with the breadth of the Panamax/
Furman line contributing to its profits. And Carmel,
Ind.-based Premier Custom Audio & Video was selected
for its “trailblazing approach” to presenting Blue-
BOLT, which has made it one of the company’s Top
20 BlueBOLT dealers in the U.S.

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