B&W Signs Magnolia, Rules Out Online Sales

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North Reading, Mass. - Bowers & Wilkins had to open up sales of its high-end home speakers to Magnolia Home Theater, Magnolia Design Center and Magnolia Audio Video outlets to compensate for the shrinking base of A/V specialty dealers, but the brand won't look to online merchants to boost home-speaker sales, B&W Group chairman Joe Atkins told TWICE.

In expanding on the brand's distribution plans, Atkins also said not all B&W speakers will go to all

Magnolia outlets

. The company, for example, will not sell its custom-install speakers through the more than 350 Magnolia Home Theater (MHT) stores within Best Buy stores, but those speakers will be available to the eight larger Magnolia Design Centers within Best Buy stores as well as to the seven standalone flagship Magnolia Audio Video outlets in Washington state, California and the Chicago area.

 The MHT stores will offer the 600 series of freestanding vinyl-clad speakers priced up to $2,000/pair, the CM series of freestanding wood-cabinet speakers priced up to $3,000/pair, and the M1 sound bar.

The Magnolia Design Centers and the freestanding Magnolia A/V stores will add the top-end Diamond 800 series of freestanding speakers priced up to $25,000/pair, Atkins said. The $31,000-each Nautilus speaker won't be on display at any of the Magnolia outlets, but the Design Centers and freestanding A/V stores will have access to them, he noted.

Products will appear in the Magnolia outlets in the fall.

"We are confident that the ongoing development of Magnolia's national brick and mortar retail model and their commitment to enhance the presentation of traditional premium audio creates a unique and exciting opportunity for Bowers & Wilkins," said Atkins.

"Going online, however, is definitely not part of our evolving distribution strategy," Atkins said, although competing high-end speaker companies such as Thiel have done so. "Our brand needs to be presented to the consumer. The more that consumers want to make a qualitative assessment, they clearly want to do so at a retail store." For that reason, he explained, the brand turned to the Magnolia outlets to fill in the geographic gaps left by a shrinking dealer base. "Consumers need to hear most of our products before spending, and they're not going to drive four hours to the next large urban center to listen," Atkins said.

"The industry was impacted very heavily starting in mid-2008, and it became more acute in 2009," said Atkins of the events leading to the distribution shift. "We had all hoped the economy would improve quickly, with dealers recovering in 2010, but the opposite is true. Since the beginning of the year, we've seen a significant number of dealers go away, including MyerEmco." Many other dealers are reducing their store counts, and "quite a few A/V specialists" have closed their retail outlets to open up appointment-only custom-install shops, Atkins added. The number of independent A/V specialists seems likely to continue shrinking during the remainder of the year and beyond, he continued.

In the past 12 months, the brand's own dealer base has fallen from about 230 retail outlets to about 180 outlets operated by about 145 dealers, Atkins said. The number of custom installers selling the company's speakers has remained stable at about 70.

Although the more than 365 Magnolia outlets selling Bowers & Wilkins speakers will outnumber the brand's other home-speaker outlets, "we're certainly not giving up on independent A/V specialists," Atkins contended. "We're working harder than ever to help them meet their challenges." At the same time, he added, "we are also confident that the increased brand exposure will benefit our existing dealer partners and enhance their ability to continue to drive profitable and sustainable retail revenue."

Atkins acknowledged, however, that some current dealers may choose to drop the brand, but he said he "doesn't expect a wholesale loss of support."

 The distribution changes do not apply to the Classe and Rotel audio electronics brands owned by The B&W Group.

 In 2009, in a separate strategy to expand sales, Bowers & Wilkins announced plans to expand into the stereo headphone and PC-speaker markets. That announcement followed the 2007 launch of the brand's first iPod-docking speaker system. These products are available through Apple stores as well as through online retailers, including Crutchfield.

In recent years, specialty-oriented audio suppliers have expanded distribution to new channels to compensate for declining sales through specialty-A/V and custom outlets. In recent weeks, Onkyo announced plans to sell select A/V receivers and home theater in a box systems through Walmart.com, and high-end speaker supplier Thiel added its third online retailer, Amazon.com.


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