INDIANAPOLIS –CEDIA Expo, held here earlier this month, illustrated how vendors, distributors, retailers and custom installers are adapting to the new
economy and going after new markets and new categories.
For instance ProSource (see story at left) is eyeing new categories that can use their installation expertise.
The PowerHouse Alliance also celebrated its third anniversary at CEDIA Expo by adding two new distributor members — Sierra Select Distributing and Dorrance Supply Company — and highlighted its recent agreement to provide CE products to Mega Group USA, the appliance, furniture and electronics retail buying group.
Dennis Holzer, executive director, told TWICE that his organization will add one more distributor within 30 days, probably in the Northeast.
He said the key to this group, aside from good deals, is to “sit in a room and learn from each other, and share best practices. Our key is controlled growth,” and while PowerHouse has been approached with many CE lines, it has been selective in picking vendors.
Eighty percent of its business is with custom installers, with the rest at retail, except for its new agreement with Mega Group, for which there is an interesting strategy, Holzer explained.
“We want to pair our installers and their products with [Mega] retailers. Consumers will deal with their local retailer, but the installers will do the installation,” he explained. “And the retailers will be trained not to just sell a TV, but mounts, cables and an entire package.
” Speaking TVs, the category’s its universal pricing program (UPP) was put in place this year — when asked how these programs will fare in the fourth quarter, Holzer said, “They will perform as well as the manufacturers who police it. It is great for the industry… better late than never. This has been drastically needed for everyone.” Holzer noted that by the fourth quarter, “UPP policies will expand, and probably be used in other product categories by next year.
” Asked if PowerHouse is looking at non-traditional categories, Holzer said, “Home energy management will be a big business. Solar energy installations, whole-house control should be growth areas.” He thinks his distributors’ custom installers have the expertise to handle such categories.
Karl Bearnarth, corporate marketing senior VP for JVC Americas, commented on how manufacturers can and should “protect their brands” from losing their equity from retailers that drop prices drastically.
He noted that there is “a risk going online” with certain products like its Reference series and Procision projectors. (JVC added SKUs to both upscale lines during CEDIA Expo.)
Bearnarth said that the upscale nature of those products call for custom installers and retailers that can explain, sell and install such products, and are not sold online. “You need a consultative sales process,” which is why those products are not sold online by JVC.
As for the company’s digital imaging line, he said, “We do permit web sales. But we do have a MAP program with it, and it is not a system. Consumers should be able to use it” as soon as it is shipped to them.
But he added that explaining and selling such products in stores is still vital since “consumers get to see, feel, touch and experience the products in person,” hopefully by an experienced salesperson doing the explaining.
Russ Johnston, executive VP of Pioneer’s home electronics department, said that the Elite TV brand, which is manufactured under license by Sharp, celebrated its first year in the market during the show.
Like JVC’s projectors, the Elite line is not sold online. Johnston said that Pioneer needed the Elite line of LCD TVs, which is jointly marketed by Sharp and Pioneer and is available through Pioneer’s authorized Elite dealer network. It has reinvigorated sales of its upscale home audio products to retailers, and eventually, consumers.
The key to Elite’s success in the marketplace has been to “sell it at brickand- mortar stores.” Again, like JVC, the reasoning is, “We are selling it through installers and dealers who can explain the technology.
” Capitol is a CE distributor for residential systems and pro A/V contractors, specialists, retailers and premium incentive resellers, and came to CEDIA Expo with a focus on education, with several training courses for its retailer and installer customers to attend.
But as Curt Hayes, president/chief financial officer, and Stephen Konsor, sales senior VP, explained, the education is all part of the evolution of the distributor to enable its customers to enter new and different categories and markets.
As Hayes noted, Capitol started in the late 1980s selling telephone systems at retail and then moved to A/V systems. He added that in the past five years, “We have gone from residential A/V systems to pro systems” as the economy slowed.
Konsor said the distributor picked up on the fact that some installers “would do a dentist’s home and then … do his office.” The execs noted that about 40 percent of its customers are “crossing over” onto the pro side.
As for the current economy, housing has picked up. “It isn’t like it was five or six years ago,” Hayes said, and it is more stable than this time last year. Capitol’s customers are adapting and emphasizing one-day retrofits of existing housing.
