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Is There A Future In A/V Specialty Retailing?

Most everyone who remembers the heyday of specialty audio/video retailing is saddened by the loss of Tweeter.

At its peak, Tweeter — and the various specialty retailers that it acquired — were quintessential specialists who sold performance-oriented products, educated customers and did the demo. But that wasn’t enough for Tweeter to survive.

In Tweeter’s case, the post-mortems keep rolling in. Some contend the 94-store, 17-state chain spent too much on acquisitions, over expanded, and stumbled in integrating all of the disparate business practices and corporate cultures of the companies it acquired. Others say the chain blurred its image, trying to bridge a gap between Best Buy and independent specialists. It took a cookie-cutter approach to merchandising, not accounting for regional market differences. It focused too much on low-margin flat-panel displays even after when the big-box stores aggressively entered the market. Others say the stores lacked the passion of the owners who sold their stores to Tweeter.

Perhaps, however, there’s a bigger issue looming behind Tweeter’s demise: the slow decline of A/V specialty retailing. It’s far more challenging for an A/V specialist to survive in the modern consumer electronics era. Maybe the specialist business model isn’t totally a thing of the past, but the attrition of specialists over the past two decades points to a business model that only a hardy few can execute.

Only 10 to 15 years ago, midsize cities were home to three to four specialists, one industry veteran said. Before that, there were many more. Now you might find one.

One challenge for specialists is staying visible in an era when big-box retailers flood the market with advertising and promotion, driving huge amounts of traffic into their stores. Specialists, even regional specialists, just can’t compete like a Best Buy for consumers’ mind-share. Lots of people are interested in high-performance audio and video, but they don’t know where to find it.

As specialists’ store traffic dropped off in the wake of aggressive big-box advertising, many specialists cut back their advertising budgets, further reducing traffic, creating a downward spiral and never getting much of a chance to show people what they can do. Likewise, Tweeter stores suffered from low store traffic, marketers tell me.

With stores unable to drive traffic in, many specialists turned to custom home installation to build sales, in some cases getting out of retail locations altogether to move into office parks. Others adopted a hybrid model, as Tweeter did, maintaining their retail storefronts while diversifying into custom. Many of these retailers found out that custom’s volume couldn’t support the overhead of a retail storefront, and they went out of business. Like Tweeter.

The Internet is also contributing to the attrition of specialists. I’m not necessarily talking about Internet sales, although that’s certainly a factor. I’m referring to consumers who educate themselves by browsing through the vast array of information available to them from their desk at home. For many consumers, it beats driving from store to store to tap the expertise of commissioned salespeople.

Specialty A/V retailing is a channel that peaked long ago. Is there a continuing role for A/V specialists in the future? Please send us your thoughts.