By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Ultimate Electronics took advantage of the number of executives gathered in nearby Denver for CEDIA Expo earlier this month to showcase its 30,000-square-foot flagship store, located on the ground floor of its headquarters, here.
The store was never completely closed while renovations were made, and the flagship reflects the changes that the now 32-unit chain has made in the past 18 months when Ultimate was out of cash, went into Chapter 11 bankruptcy protection and saw Hollywood Video founder Mark Wattles buy a controlling interest in the company. Projected sales for this year are just shy of the $400 million mark (see TWICE, Aug. 7, p. 18) and for the first time in five years the company is posting positive same store sales and cash flow.
Bruce Giesbrecht, recently named pre-sident/vice chairman of Ultimate, noted that in the past 18 months, “We stabilized the infrastructure of the company.” When Wattles first invested in the chain “most consumers still liked our brand, but were reluctant to spend on high ticket items fearing we would be out of business soon.”
Along with a large cash infusion from Wattles, “What we have done is concentrate on our people, get them excited about what we are doing and promote the brand. We are 'guest'-focused to provide customers with the complete solution for their CE needs,” Giesbrecht said.
Jim Pearse, senior VP of merchandising put it this way: “We have spent the past few months re-establishing the passion we have for [CE] which helps our brand.”
Among the changes that are part of Ultimate's new look and feel are:
A Flat Panel Theater department that merchandises flat-panel TVs with audio systems in various home-like settings;
A THX room to highlight HD projection systems and high-end audio;
A Mirage audio and home speaker showroom, selling mid- to upscale product;
Ultimate Ride, the chain's mobile electronics area that sells and performs installations.
Except for Ultimate Ride, which is in 24 of Ultimate's 32 stores, the other three features are found in all of the chain's locations.
Ultimate is also testing two other store concepts at its Thornton flagship: Ultimate Home, an in-home sales consulting service
for consumers considering a home theater or home automation system; and a dedicated Sony department, which is described as a “store-within-a-store” and not only features the manufacturer's HDTV line, but a variety of home theater, digital imaging, accessories and other Sony products.
The Thornton location also features an “IHD” department, which stands for Integrated Handheld Devices, that is located at the front of the store. In discussing this and other new store areas within Ultimate, Pearse explained, “This department combines iPod, MP3 players, digital cameras and Verizon handsets and services. We have seen growth with these types of products in the past three or four years. So we put them in one department to illustrate what they can do, and in some cases how some of these products can attach to your TV.”
In discussing the different new features and departments at Ultimate, Pearse pointed to two key areas, the first being the Flat Panel Theater department at the back of the Thornton store. “This combines home audio and flat panel displays and gives consumers a home entertainment environment.” The new area enables Ultimate to increase the amount of flat panel SKUs to display from such suppliers as Pioneer, Sony, Panasonic, LG, Samsung, JVC and Sharp.
The Ultimate Home department is designed for sales consultants to “go to a consumer's home for consultation to see what the customer needs in terms of home automation or custom installation,” Pearse said. “We don't sell $100,000 systems.”
“This is an evolution for us,” Pearse noted. “We've always had our own installers. That is the key.”
Another key is that Ultimate still has a commission-based sales force that “provides a consulting [sales] process where consumers can ask questions and get educated answers,” he added.
David Smith, senior VP/marketing, noted that Ultimate is “trying to sell solutions. We are not just selling products and that's where our experienced sales team comes into play.”
As for the immediate and near future, Giesbrecht stopped short of revealing anything about expansion plans. He did note that Ultimate is “excited about the future” and that expansion might be addressed“sometime in 2007.”
As for the fourth quarter, Pearse said that in HDTV the growing competition between plasma and larger-screen LCDs should create “another round of price cuts later this year. We expect it and it is a concern.”
Nevertheless, he thinks Ultimate “Still has a big opportunity in HDTV. We feel we can match consumers with the right technology for the best HDTV purchase, especially when we help them match it with a good audio system.” He remarked that while home audio sales are currently flat, they are getting better as the fourth quarter approaches.
Philosophically Ultimate sees itself as “a destination store” according to Smith, who added, “We are re-establishing our relationship with our customers, many of whom have bought products from us over the years.”
And Pearse noted, “We are aware of consumer confusion with technology. We have to provide solutions.”
Giesbrecht remarked that consumers “often come in for the product they think they want. We have to talk to them to show what we have available to provide them with a solution.”
He related a recent conversation with a Sony executive. “He said, 'The consumer thinks he knows what he wants in consumer electronics, but he doesn't. What we have to do is show him or her all the products that are available.' What we have to do is provide choices to sell value-added solutions.”
With the changes in store layout, SKUs and service features, Ultimate's executives feel that its sales turnaround of the past few months is no accident and that the chain should reap plenty of benefits as the calendar turns to the holiday sales season.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.